Fellow Tarneitans: Essential reading on rising electricity costs.
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How network companies lined their pockets and drove electricity prices through the roof
by Jess Hill
Source – The Monthly, published July 2014
The electricity industry likes to promote itself as wickedly complex, but it’s actually quite simple. Generators produce electricity that is transmitted via giant steel towers along high-voltage wires that connect to local substations, which feed power into street-level poles and wires that carry it directly to our homes and businesses. The steel towers are owned by the transmission networks, and the smaller poles and wires are owned by the distribution networks. Retailers like Origin Energy, AGL and EnergyAustralia are the shopfront – they just package up all the costs and charge them to you. Some retailers also own power generators – Origin has big investments in gas- and coal-fired power plants, for example – but neither the retailers nor the generators have much to do with the networks in between them.
In the past few years, our electricity prices have doubled. While the media has feasted on the likes of pink batts, Peter Slipper and Craig Thomson, the astonishing story behind these price hikes has been all but ignored. And yet, it may be one of the greatest rorts in Australia’s history.
Since 2009, the electricity networks that own and manage our “poles and wires” have quietly spent $45 billion on the most expensive project this country has ever seen. Allowed to run virtually unchecked, they’ve spent vast sums on infrastructure we don’t need, and have charged it all to us, with an additional fee attached. The spending was approved by a federal regulator, and yet the federal government didn’t even note it until it was well underway.
Let’s be clear: this is the single biggest reason power prices have skyrocketed. According to the federal treasury, 51% of your electricity bill goes towards “network charges”. The carbon tax, despite relentless propaganda to the contrary, is small beer, comprising just 9%. The rest of your bill is carved up between those companies that actually generate your electricity (20%) and the retailers who package it up and sell it to you (20%). The Renewable Energy Target is such a small cost impost, the treasury’s analysis doesn’t even include it; the Australian Energy Market Commission says it makes up around 5%.
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