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Electricity profits up $100m, but users switch off

THE profits of electricity companies increased by $100 million in the past financial year and power bills are rising despite consumers using less electricity, an audit of state-owned energy companies has found.

The NSW Auditor-General, Peter Achterstraat, said wholesale electricity prices had fallen in 2010-11 because NSW consumers were using less electricity, but retail prices were rising because the companies were spending more on maintenance of the distribution systems, especially poles and wires.

''The wholesale prices are down, down, down, but the retail prices are up, up, up,'' Mr Achterstraat said.

However, there was no evidence companies were price-gouging. ''The electricity market is a very, very complex one and the price of electricity can vary from $3 a megawatt hour up to $6000, depending on spikes [in demand],'' he said.

''It's the same electricity you're getting, but it all depends on various components, including if everyone switches it on at the same time.''

Mr Achterstraat has recommended that the power companies be required to demonstrate ''an efficient and prudent capital expenditure program'' in their submissions to the Australian Energy Regulator.


The audit shows that after-tax profits rose from $1.1 billion to $1.2 billion in 2010-11. The dividends and taxes paid to government by electricity companies rose from $1.16 billion in 2011 to $1.43 billion this year.

It found consumer electricity bills were rising sharply, up by 80 per cent over the past five years. The price paid to the generators for electricity had fallen over the same period.

Spending on poles and wires contributed half the cost of residential electricity bills. The next highest cost was generation (25 per cent). The cost of retailing the electricity contributed 10 per cent, the carbon tax added 8 per cent and ''other green schemes'' contributed 7 per cent, the audit found.

Mr Achterstraat said spending on poles and wires was due to companies upgrading networks to cope with demand at peak times. He would like to see the companies innovate to improve their demand management.

''I'd like it if I can get an app, or a text or a tweet, from my electricity company saying, 'Look we're reaching peak demand time, would you mind switching off your dishwasher or power point or power tools until later on'.''