Electricity companies rorting the system, inquiry told

The network portion of the power bill for Victoria’s household is about a quarter of the bill compared to half in other states, Gerard Brody, the chief executive of the Consumer Action Law Centre told a Senate Inquiry Wednesday.Victoria’s electricity network operators such as Ausnet and Jemena may be more efficient than their interstate counterparts and the network portion of household bills have not increased as much, but this has not stopped the companies from attempting to rort the system, a government inquiry has heard.
Nanjing Night Net

The network portion of the power bill for Victoria’s household is about a quarter of the bill compared to half in other states, Gerard Brody, the chief executive of the Consumer Action Law Centre told a Senate Inquiry Wednesday.

“However, this has not stopped the networks using the regulatory system to obtain returns” that are higher than would be the case otherwise, he said, pointing to the regulator’s decision to force customers to pay “excess expenditure” relating to the roll-out of smart meters to the tune of $111 million.

“This means that the cost of the rollout was this much higher than initially budgeted for, but consumers still pay the difference,” he said.

“As for-profit privately-run businesses, it is natural for these businesses to seek to maximise returns. The point is whether the regulatory regime is sufficient.

“It has been estimated that appeals of [Australian Energy Regulator] determinations of revenue allowances has resulted in $3 billion additional being paid for by consumers,” he said.

The success of these appeals indicated it was poor rules that enabled businesses to recover so much money

The Consumer Advocacy Centre has also thrown its weight behind allowing network companies to write down the value of assets which are no longer needed as demand for electricity supplied through the network deciness and consumers switch to new energy sources, such as solar panels, which may not need to utilise the power network.

“This will mean that those [who continue to use the networks] are not unduly burdened by continuing to bear the costs of sustaining the full network,” Mr Brody said.

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