Electricity bills in Sydney, and possibly other parts of New South Wales, will rise above current levels following a decision by the Full Federal Court today.
‘While the exact price implications of today’s decision are unclear, these bill increases will come as higher wholesale electricity and gas prices add hundreds of dollars per year to household energy bills’ said Craig Memery, Team Leader of PIAC’s Energy and Water Consumers’ Advocacy Program.
‘For many households, every dollar on their energy bills that comes from today’s decision is a dollar they simply can’t afford.’
‘Not only will New South Wales households pay more following this decision; the precedent set will affect future decisions by the regulator, impacting households across the country.’ said Mr Memery.
Since 2015, NSW electricity networks (Ausgrid, Endeavour Energy and Essential Energy) have been locked in a legal battle with the Australian Energy Regulator (AER) in relation to the amount that electricity networks can charge for their services. PIAC has represented NSW consumers in these proceedings, arguing for lower prices.
In a decision announced today, the Federal Court has upheld most of the network businesses’ arguments, in favour of higher prices. However it also upheld one of the AER’s grounds of appeal, in relation to corporate income tax.
‘Government, consumers, and the regulator have worked incredibly hard to make energy regulation work better for consumers and bring prices down, but network businesses have fought tooth and nail to retain a system that they can manipulate at the expense of households.’ Said Mr Memery.
‘PIAC’s intervention in this case was the first time a consumer group has been heard in an electricity price dispute before the Full Federal Court. We will be exploring all our options to continue to fight for fair energy prices for consumers in NSW and across the country.’
‘The Court’s decision highlights the need to fully resource strong consumer representation in the review process,’ said Craig Memery.
Background
In April 2015, the AER made five-year revenue determinations for three NSW electricity networks (Ausgrid, Endeavour Energy and Essential Energy). For the first time in many years, the AER decided to cut the networks revenue allowances, which has resulted in a reduction in the average household bill by around $100 per year ($300 in regional areas).
While this decrease, which has been in effect since 1 July 2015, has been welcome, PIAC believes that the determinations still allow the networks to operate inefficiently when compared with other similar businesses, and keep electricity prices unnecessarily high.
That’s why, in May 2015, PIAC launched a landmark legal challenge to the AER’s decisions, calling for even greater price reductions. However, at the same time, the network businesses also challenged the AER’s determination, arguing that they should be able to collect even more revenue.
The Tribunal held three weeks of hearings in September and October 2015, in which PIAC represented the interests of the consumers. This was a first for a consumer organisation. Prior to reforms to the National Electricity Law in 2013, only the electricity networks were able to contest the AER’s determinations.
The Tribunal’s decision, which was eventually handed down in February 2016, was disappointing. The Tribunal’s approach meant that it did not decide on some of PIAC’s arguments, and instead it accepted the network businesses’ position that they should be allowed to collect even more money from consumers.
In March 2016, the AER announced that it would seek judicial review of several aspects of the Tribunal’s decision. PIAC was granted leave to intervene in the case and a hearing was held in October 2016. Today’s decision is the outcome of this judicial review.
CONTACT: Media and Communications Manager, Gemma Pearce: 0478 739 280.
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