Electricity is overpriced

It’s official. Even the Prime Minister thinks that Australian energy costs are excessive. In a speech yesterday Prime Minister Julia Gillard gave the states until December to take the pressure off electricity prices or be hit with “the big stick of regulation”.

Ms Gillard said that the system had failed to strike the right balance between affordability and reliability of supply, and threatened to give greater power to the Australian Energy Regulator, and the Australian Competition and Consumer Commission, if prices continued to rise. She also said that the states needed to give consumers better information, such as when they were using ‘peak power’ (more expensive), or ‘off-peak power’ (less expensive), in order to allow them to control their energy spending.

The states were warned to stop price-gouging by over-investing in poles and wires. The practice of over-investing, or ‘gold-plating’, causes power prices to increase unnecessarily in order to fund the increased overheads of the owners of the system, which in some states is the state government.

In New South Wales, where the state government is responsible for energy prices, the cost of energy has increased by 69 per cent over the last four years, which had nothing to do with the carbon tax. This year it has increased by 18 per cent, only half of which is due to the carbon tax. 

In order to control this increase, Prime Minister Gillard has said that the states must agree to a series of measures at a meeting in December or face tighter regulation.

To find out more read The Age article Gillard threatens to use shock therapy on electricity prices.

Comment – Forcing energy prices down

While I think Julia Gillard has her flaws, and I don’t always think she hires the right people (shame on the speechwriter who came up with “the big stick of regulation”), for the first time in a long time I am proud of our nation’s leader.

There is so much petty infighting in the political world at the moment that, until I read this speech, I had forgotten why we have politicians. It’s not so that they can win elections. It’s certainly not for our entertainment, or to keep the papers in business. We have politicians so that there is always somebody looking after us, the little people. And that is exactly what has been done here.

We are being massively overcharged on our electricity bills, by companies that earn more money than many of us can even begin to fathom, and finally someone has spoken up. Yes, Tony Abbott blustered on about the carbon tax after the Prime Minister made her speech. But it is obvious from the statistics that these outrageous price increases were happening long before that little political nightmare. This isn’t about the carbon tax, it’s about a much bigger problem. We just have to hope that Ms Gillard isn’t all talk and that, come December, she sticks to her guns and fights for our right to turn on the lights without handing over our life savings for the privilege.

What do you think? Are you paying too much for electricity? And do you think that stricter regulations will make a difference, or is this a losing battle against the corporate giants?