South Australia power prices to rise to highest in the world on Saturday, energy expert warns


Power lines and pylons against sky.

South Australia will overtake Denmark as having the world’s most expensive electricity when the country’s major energy retailers jack up their prices this Saturday.

AGL, EnergyAustralia and Origin Energy will all increase their electricity prices from July 1, adding hundreds of dollars to annual household bills.

Residential customers will see an average rise of 18 per cent under AGL, 19.9 per cent from EnergyAustralia, 16.1 per cent with Origin Energy.

Bruce Mountain, the head of a private energy consultancy firm, said the increases would see South Australia take the lead on world power prices — but for all the wrong reasons.

“After taxes, the [typical] household in South Australia will be paying slightly more than the [typical] household in Denmark, which currently has the highest prices in the world,” Mr Mountain said.

“These things are complex — just because the statement might be true for the representative customer might not mean it’s true for you.

“But the broad picture is that these prices can be thought of as the highest in the world.”

Mr Mountain made the prediction based on national and international energy market data, and papers published by the Council of European Energy Regulators and OECD.

Power prices exceed value

He said the price Australian customers, particularly South Australian customers, were currently paying for power exceeded the actual value of electricity as a resource.

“I think it is surprising that [power prices] have continued to rise as they have and the latest increases are remarkable — the household price going up by around a fifth on top of the existing prices is extraordinary,” he said.

“This is a very well established service, it’s been around for many years [and] it’s very rare to see such large increases in retail electricity from one year to the next.

“I don’t believe it’s matched by the aggregate cost in the supply chain.

“Our markets are not working well, and it goes from the operation of the retail market, to the wholesale market, to the regulatory oversight of networks.”

Yesterday, an Adelaide plastic recycling business announced it was forced into liquidation partly due to exorbitant power prices.

Plastics Granulating Services said it had seen its monthly power bills increase from $80,000 to $180,000over the past 18 months.

Power prices pushing more people into poverty

Anglicare SA’s general manager of community services Nancy Penna said demand for the organisation’s financial services had increased by as much as 20 per cent this year.

“We’ve calculated that there are at least 500 additional, new people coming to our services seeking financial assistance and counselling related to their cost of living,” she said.

“People will actually state that they can’t pay their electricity bills and they’re having to make decisions about which bills to pay.

“Do they pay their credit cards? Do they pay their utility bill? Do they buy food for the table?

“People are wondering, when is this all going to end?”

Ms Penna said she believed demand would increase further, when higher power bills started to arrive in the coming financial quarters.

Businesses brace for crippling energy bill increases

BUSINESSES will be forced to cut staff or shut down altogether as crippling energy price hikes begin sweeping across the nation this month.

The small business lobby group says urgent action is needed to resolve the decade-long national deadlock on energy policy in the face of what’s being described as a bigger crisis than the GFC.

“This is the biggest business crisis I’ve seen in my lifetime,” said Peter Strong, chief executive of the Council of Small Business Australia. “The GFC was managed and it affected everybody, but this is only Australia and we cannot see a solution.

“What we’re hearing is terrible. We’re seeing closures have already started, I fully expect there will be more closures and staff put off. When you’re running a small supermarket, where do you find an extra $70,000?”

The price hikes hitting businesses of up 120 per cent — dwarfing the 20 per cent increases faced by households — have been partly blamed on the closure of cheap coal-fired power stations, including Hazelwood in Victoria and Playford in South Australia.

Another key driver has been the high price of gas, partially due to a shortage of east coast domestic supply.

Last week, family-owned South Australian recycling business Plastic Granulating Services was forced to make the “heartbreaking” decision to close its doors after nearly four decades, leaving 35 employees out of work.

Managing director Stephen Scherer said his monthly electricity bill had increased from about $80,000 to $180,000 over the past year-and-a-half. “It was totally unsustainable for a business our size,” he told The Advertiser. “It was heartbreaking.”

On Saturday, One Nation leader Pauline Hanson was in Central Queensland’s Capricorn Coast visiting small businesses, some of whom are already paying quarterly power bills of up to $20,000.

“They are going under, and that’s before the price hikes,” Ms Hanson told The Morning Bulletin. “All our governments have to start waking up to themselves.”

She described the situation as “devastating”. “I’ve seen the number of shops that have closed or up for lease, small businesses are struggling, they’re going under,” she said.

“You’ve got owners that are working six or seven days a week just to make ends meet and what will be the straw that will break the camel’s back will be the rising electricity prices. I’m in fear now of what is going to happen in the state and around the country because it’s just going to break a lot of people.”

Ms Hanson said One Nation would support the development of a new coal-fired power station for North Queensland, echoing the pro-coal position of former prime minister Tony Abbott.

Mr Abbott last month caused friction with his outspoken criticism of the Finkel Report’s recommendation for a Clean Energy Target, which he described as “effectively, a tax on coal”. The Coalition party room adopted 49 of the 50 recommendations by chief scientist Alan Finkel, excluding a CET, but Energy Minister Josh Frydenberg said such a scheme was still under consideration.

It came as the Turnbull government announced a “three-pronged” attack to address the energy crisis, including new regulations to restrict gas exports starting from January 1, 2018.

Mr Strong hit out at the Liberal backbench for being too focused on “ideology”. “The dissenters in the Libs need to shut up and go away,” he said.

“Tony Abbott in particular is the reason nothing has been done. The Finkel Report is a good report and it needs to be actioned. To promise power prices would go down [through scrapping the carbon tax] and to have them go up 110 per cent is one of the biggest policy failures we’ve ever seen.”

Mr Strong said small businesses would be “comfortable with a small increase in power costs” to address climate change, but what they wanted was certainty. “The first thing is power bills and quotes need to be written in plain English,” he said.

“The second, is we need to know when blackouts are coming, like in Victoria and South Australia, so we can prepare, go out and get our generators. With the power costs, we need to know in advance when they’re going to go up.

“Some people might say you can’t predict that, but that is a bigger problem as well. If you can’t predict that, how can you run a business?”

Mr Strong said he never had a debate with his members about “whether climate change exists”. “No one’s ever questioned the renewables,” he said. “Whatever happens they understand we’ve got to do something — we don’t have many climate change deniers.”

Last month, Small Business Ombudsman Kate Carnell called for both sides of politics to endorse the Finkel Report to avoid job losses and business closures. “Business as usual is no longer an option,” Ms Carnell said.

“Business as usual is lack of reliable power and exponential price increases. The most important issue here is that support from all sides of politics for Finkel gives investment confidence. These investments are long term. You don’t invest in power for two, three or five years.”


One comment

Leave a Reply