Draft report: electricity prices for regional customers in 2015-16

The Queensland Competition Authority (QCA) today released its draft determination on regulated electricity prices for customers in regional Queensland for 2015–16.

“The draft determination explains the retail prices that, on current information, we expect will apply for customers in regional Queensland from 1 July next year,” said QCA chairman, Malcolm Roberts.

“We are releasing these draft prices for consultation with the community before our final decision in May 2015.

“The 2015–16 determination is the first time the QCA will be setting prices solely for regional Queensland. The QCA has been guided by the Queensland Government’s uniform tariff policy which requires that nearly all regional customers pay prices based on the much lower costs in south east Queensland of supplying electricity. The uniform tariff policy will subsidise regional electricity prices by an estimated $655 million in 2014–15.

“The good news is that the cost pressures which have been pushing up electricity prices are now easing. Customers can expect to see much more modest increases and even some price decreases in 2015–16. The 2015–16 prices are shaping up as some of the lowest price changes ever announced by the QCA.

“The latest information indicates that the typical residential customer could see an increase of 2.7% or $40 in their annual bill. A typical business customer could expect an increase of around 1.3% or $27.

“These price increases compare favourably with the 2014–15 increases of 5.1% and 3.3% respectively.

“It is also possible that the final prices announced for 2015–16 could be lower than the draft prices released today,” said Malcolm Roberts.

Rising network costs have been driving up prices. ‘Poles and wires’ now account for almost 50% of the typical residential customer’s bill.

“In 2015–16, we expect network charges will increase at less than the rate of inflation (about 1.2% for tariff 11 and 0.7% for tariff 20). Network costs may even fall given that the Australian Energy Regulator (AER) is yet to approve the new charges being proposed by Energex and Ergon.

“We have calculated network charges using Energex and Ergon’s draft prices. We will revise these calculations after the AER releases its preliminary determination.

“Residential and small business customers bear the cost of feed-in tariff payments under the Solar Bonus Scheme. In 2015–16, the scheme is expected to cost the typical residential customer $89 and the typical small business customer $114. These costs are included in the QCA’s draft prices.

“The Queensland Government has announced that it intends to remove the cost of the Solar Bonus Scheme from electricity prices from 1 July 2015. If this change occurs, the QCA will reduce prices accordingly.

“Given that the latest information is pointing to price increases for small business customers, the QCA proposes a 5% increase for transitional and obsolete tariffs. These tariffs offer lower prices than other business tariffs. Since 2013, the QCA has been increasing prices under these tariffs in line with increases to standard business tariffs. The QCA understands concerns about the impact of higher prices on customers using transitional tariffs – we will review the need for the proposed 5% increase when settling the final changes to other small business tariffs,” said Malcolm Roberts.

Community consultation is set to commence early in 2015. Submissions are welcome on our draft decision by 27 February 2015. Visit the QCA website: www.qca.org.au/Electricity

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