CCIQ says money grab by Energex is overly excessive
The Chamber of Commerce and Industry Queensland (CCIQ) says Energex’s bid for more money is “excessive” and will only put electricity prices up.
CCIQ has provided a submission to the Australian Energy Regulator (AER) in response to Energex’s regulatory revenue proposal for 2015-2020.
Every five years the electricity network distributors apply to the AER for their allowed revenue over that period. Energex’s proposal seeks to recover less capital expenditure (capex) and operational expenditure (opex) than the previous regulatory period.
The revenue approved by the AER is passed directly on to consumers, with the more revenue recovered, the higher the costs for consumers.
CCIQ General Manager of Advocacy Nick Behrens said Queensland small businesses had seen unsustainable increases in electricity prices in recent years.
“The AER revenue determination process is particularly pertinent, as the network cost component makes up more than half of the average electricity bill. Therefore, in order for small businesses to see real cost savings, the network charges must be drastically reduced,” he said.
CCIQ conducted a survey of 1100 small businesses in December 2014 which found increasing electricity prices the most significant business cost issue, with 65 per cent indicating a major or critical concern with the cost of energy.
Energex is seeking a total of $8.4 billion in revenue (up from $7.4 billion in the previous five-year regulatory period).
“The practical result of this complex issue is that Queensland electricity consumers will be paying a higher electricity price than they otherwise should have to if Energex was to adopt comparable industry benchmarks,” Mr Behrens said.
Energex has reportedly experienced significant under-recovery of revenue in the previous regulatory period and is seeking compensation for this variation against budget through their 2015-2020 proposal. This under-recovery has arisen from lower than forecast energy usage resulting from increased energy conservation, use and installation of energy efficient appliances and the high uptake of solar PV.
“Queensland consumers are already heavily burdened by the impost of costs associated with the Solar Bonus Scheme and it is unacceptable that they should be responsible for compensating the failure of Energex to adequately forecast demand,” Mr Behrens said.
“Additionally CCIQ is disappointed to see that Energex attributed little in its proposal to address the impact that emerging technologies are likely to have on the overall demand and customer rates.
“CCIQ’s submission focussed on bringing down the costs of capex, opex and the WACC. The submission also addressed issues with Energex’s consumer engagement, the solar bonus scheme and future technology.”
The AER will make a draft determination by late April. The network distributors will then be able to submit a revised proposal and the AER will make a final determination by the end of October 2015.
CCIQ’s submission can be viewed on our website: https://www.cciq.com.au/advocacy/submissions/