Business

'Deliver benefits consumers need'

ELECTRICITY market regulators need to ensure consumers are paying only for network reliability standards they value, Australian Competition and Consumer and Commission chairman Rod Sims said on Friday.

Mr Sims lent his voice to the escalating debate on electricity prices, begun by Prime Minister Julia Gillard this week, during a speech to the New South Wales electricity regulator.

While recognising power prices were the most significant element of recent rises in the cost of living, Mr Sims said there were things that should be done before work could begin on actually start lowering prices.

"While there have been obvious successes from the reforms of the past, the current experience of consumers is causing understandable concern.

"Based on Australian Bureau of Statistics data, prices have grown by an average of around 50% in real terms in national electricity market (NEM) capital cities over the last 5 years.

"For many consumers the price increases have been even larger than this.

"IPART's regulated tariffs, for example, have increased by around 80% in real terms over this period."

Among his suggestions were reforming the current national electricity rules and ensure the money spent on new "poles and wires" was actually delivering the benefit consumers needed.

Mr Sims also outlined the need for privatisation of electricity markets, particularly in Queensland and NSW.

He said while good regulatory policy was important, it was no substitute for good governance.

"The incentives of Government shareholders are unavoidably mixed and complicated by multiple and disparate objectives," he said.

"It is difficult to know what the outcomes would have been had the businesses been in private hands in recent years.

"But perhaps clearer, more commercially disciplined governance and internal expenditure review processes would have assisted in preventing some of the recent significant price increases.

"Also, we have seen how ad-hoc policy development, by state and federal governments, can have unintended consequences and contribute to cost and price increases.

"The plethora of commonwealth and state subsidies for solar panels provide an example of how ill-considered policy making by different levels of government can lead to large and unnecessary costs for all consumers, and uncertainty for business."

Topics:  accc, electricity



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