How much should we be paying for an essential service?

By Georgina Pickers

In Australia, especially Queensland we depend on the state government to supply cost effective energy and drinkable water.

NCWQ’s long interest in Consumer Affairs matters made it especially important to participate in a government initiated group called the Consumer Industry Reference Group (CIRG) which was established in early 2014.

As the CIRG consisted mostly of industry and retail network representatives it was decided late 2014 to establish a ‘shadow’ group consisting of consumer and small business stakeholders hence the Queensland Energy Consumers Reference Committee (QECRC) was formed. This group is spearheaded by the Chamber of Commerce and Industry Queensland (CCIQ) and Queensland Council of Social Service (QCOSS) It was a natural crossover that NCWQ also joined this group.

While valuable insights were gained as to the broad energy supply picture and challenges facing all participants of the CIRG group, the smaller more consumer focused QECRC group allows the NCWQ to put views that emphasise that energy and water are an essential service; that cost for both must be ‘fair and affordable’

In March 2016, after consultation with members of the QECRC, a 45 page submission on electricity pricing was sent to the Queensland Productivity Commission. This submission may be viewed at: (joint submission) or

The final report for the Electricity Pricing enquiry was delivered to the State government by the QPC on 31 May 2016. The 268 page draft report can be viewed at

With the deregulation of the retail electricity network in South East Queensland it’s essential that consumers know what their power is costing and if they can economise their usage. The government is encouraging you to visit a website or call your current electricity retailer. While this action may assist those with large energy usage, i.e. businesses, primary producers, larger families, those with a pool or continuous air conditioning or power needs, where does that leave the many who already are frugal with energy consumption?

What is not widely understood is that you can save money on your usage (consumption), the daily supply-charge (annually increasing in excess of the CPI) is not negotiable. This cost is paid by the retail network to the wholesale power generators and distributors-Energex, Ergon and Powerlink (in North Queensland) and in turn passed on to the consumer.

Various opinions and media articles, particularly a recent one by Queensland Consumer spokesman Hugh Grant make the point that Queenslanders are paying far more than the rest of the country for energy needs. (Courier Mail article May 15, 2016)

Historically this has been brought about by State government ownership of the entities that generate and maintain the networks (wires and poles) distributing the power. In simple terms these semi-government authorities over the years, have over-estimated the capital they need to put aside for industry/population projections and their subsequent energy demands and expanded network maintenance. We have therefore been paying higher costs than we might have ordinarily done so. Research suggests costs could be at least 30% cheaper while still allowing the networks to make a fair profit.

That being said, profit proceeds go to government. These returns are vital to the running of the state. In financial challenging times, it is not unreasonable to think that current and future budget demands will increasingly rely upon, if not exploit, this dependable revenue source.

While individuals’ prudent use of energy; considerable time ‘shopping around’; and annual review of energy providers may save you money short term, it is concerning that if costs keep escalating more consumers will migrate off ‘grid’. Those who have the financial capacity and practical means of becoming self-sufficient (i.e. solar and battery installation) will leave the network, adding cost pressures to those who are left to provide financial return to the principals.

So will the much lauded deregulation of retail electricity in SEQ produce the results that the government hopes? Is added pressure needed to revise the regulatory accounting requirements imposed on Energex and Ergon that have resulted in higher costs? Will future technology changes also make it make it essential to review cost structures and current reliance on low cost fossil fuels? Some commentators believe so.

This writer believes essential services should be kept in the hands of government but at the same time they must be revenue neutral, not a revenue stream to help balance the budget.



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