Regulator backs calls for end of price controls in electricity market
THE NSW government's energy pricing regulator has thrown its weight behind moves to remove all price controls over electricity, arguing that controls have not protected households from hefty price rises in recent years.
''Retail price regulation has not protected consumers from electricity price shocks,'' the Independent Pricing and Regulatory Tribunal chairman, Peter Boxall said.
''A well-functioning retail market - in which there is competitive rivalry between electricity retailers - is the best way to ensure that … electricity prices are driven towards the efficient cost of retail supply.''
Electricity prices for those still on government-regulated pricing contracts, which make up for about half of all consumers in NSW, have risen sharply in recent years, with rises averaging about 20 per cent taking effect from July 1.
Studies are under way to assess the extent of competition in the NSW market, although price controls are expected to remain in place until at least after the next state election, which is due to be held in early 2015. IPART is to set the regulated tariff for the period 2013-2016.
Even though the NSW government is committed to holding price rises to less than the level of inflation, recent rises in the cost of renewable energy, most notably the federal government's small scale renewable energy scheme, is expected to result in retailers seeking price rises.
The prime driver behind rising electricity prices has been surging investment to upgrade the network, the so-called poles and wires, which has now peaked.
The need to fund network upgrades accounts for about half of the price rises.
''We're going through a peak in network investment,'' the federal Energy and Resources Minister, Martin Ferguson, said yesterday. ''No one suggests it will continue in the next five-year cycle.''