Victoria in the dark on energy cost rises
SO, VICTORIA is the place to be when it comes to electricity market reform.
''Victoria in many respects has led the way,'' was Martin Ferguson's conclusion when he released the long-delayed energy white paper outlining the state and future of the Australian energy industry.
''The willingness of other state governments to take on these hard reforms will be essential,'' the minister said. ''It will take political courage where others have failed.''
Victoria deregulated its retail electricity prices in 2009 and became a beacon for deregulation advocates in Australia and beyond.
The trouble is Victorian electricity consumers are hardly better off than their interstate cousins, copping much of the same 50 per cent rise in power prices over the past four years that has stoked anger from household and business users alike. And the near-term projections are, if anything, worse for Victorians.
The energy white paper relies on the same Australian Energy Market Commission (AEMC) numbers released this time last year, which forecast retail power prices between 2011-12 and 2013-14.
Victorians can expect retail prices to rise 31.5 per cent over the period, not far short of triple the average projected national rise of 12.1 per cent, AEMC said.
NSW and Queensland - ''gold-plating'' central when it comes to excessive investment in those poles and wires by their state-owned power companies - will see retail price increases of just 7.1 per cent and 8.4 per cent, respectively.
Victoria is clearly leading the way on that one. But just where is something of a guess. The AEMC's footnote to its table of price increases strikes this rather plaintive note: ''In Victoria, the entire retail margin is included in the retail component and should be treated with caution given the absence of access to data.''
That's a polite way of saying, we only know what the companies want to tell us.
And what might be causing such runaway retail price increases? Competition, oddly, appears to be driving costs up rather than down even as wholesale prices slide.
Recent Victorian data suggest the annual churn of customers amounts to 28 per cent, and probably costs the retailers $200 for each client change. Think about that the next time you answer the door to someone hawking (on commission) the benefits of switching.
To be sure, Victoria does have one advantage over the other states that Mr Ferguson was keen to stress - the mandatory rollout of ''smart meters''. The meters provide two-way information that may one day provide the opportunity for consumers to respond to higher prices by reducing their consumption - and get rewarded for it.
More to the point, peak wholesale electricity prices, which apply for just 30 hours per year, account for 30 per cent of wholesale power bought for households and small businesses - a ratio that could sink if users can respond to price changes.