Electricity prices will increase for Canberrans from 1 July, the Independent Competition and Regulatory Commission (ICRC), the ACT’s economic regulator, announced on Monday. But the ACT Government said it would help 31,000 lower and fixed income households to pay their bills.
“While the decision from the ICRC on prices comes after a period of lower prices,” Chief Minister Andrew Barr said, “the Government recognises that these increases will be difficult for some Canberra households – particularly those that have been impacted by COVID-19 financial pressures.”
The average household’s yearly electricity bill will increase by $195, and small businesses’ electricity costs will increase by $751, said Dr Emma Campbell, CEO of the ACT Council of Social Services (ACTCOSS).
“No one appreciates a bill increase, but the impacts will be felt most keenly by Canberrans on income supports and low incomes. For people on a tight budget, an extra $195 on their electricity bill means $195 less to spend on groceries, rent, or medical appointments. It can also leave people with no choice but to turn off the heater and weather the Canberra cold.”
What is the ACT Government doing?
As an immediate response to the ICRC’s decision, the ACT Government will:
- Permanently increase the annual Utilities Concession by $50 to $750 annually.
- Increase the Utilities Concession by $50 for 2021-22, taking the payment for next year to $800. This will cover a significant proportion of the annual electricity bill for lower and fixed income households, Mr Barr said.
- Contribute $1 million to the Utilities Hardship Fund over four years.
- Establish a co-governed energy literacy and education program with the community sector; the government will contribute $950,000 over four years.
- Expand access to the Utilities Concession to all those who hold an ACT Services Access Card, including asylum seekers.
ACTCOSS welcomed these measures by the ACT Government to reduce the burden of electricity price increases for eligible Canberrans, Dr Campbell said.
Through a community awareness program, the Government will encourage all households to ensure they are getting the best deals possible, Mr Barr said. Around 40% of Canberra households have been on standing offer contracts for a long time, but lower prices were available.
Community sector organisations were well placed to help consumers access the right information and support, Dr Campbell said; comparing plans was time consuming and difficult to navigate.
The ACT Government has directed the ICRC to make a new industry code under the Utilities Act 2000, requiring electricity retailers to make it easier for Canberrans to compare electricity offers and get better details from retailers. Retailers will have to compare the annual price of their offers to a reference price; regularly tell their customers if they have a better offer; ask customers to contact them for information; and give clear advice to their customers.
ACT consumers can also compare retail electricity offers by using the Australian Government’s comparison website, Energy Made Easy.
Consumers experiencing financial difficulties in paying their electricity bills should ask their retailer about payment plans and hardship assistance.
Energy efficiency was another way people could take control of their energy bills, said Shane Rattenbury, Minister for Water, Energy and Emissions Reduction. “There is a lot all households can do to be more comfortable while using less power, with government advice and support to make those changes at www.actsmart.act.gov.au.”
The 74,000 households and businesses that have already participated in the ACT Government’s Energy Efficiency Improvement Scheme save an average $300 per year for households and $5,200 per year for businesses. The scheme offers energy savings for low-income priority households.
More than half of all lower income households in the ACT rented their home, Dr Campbell observed, leaving them with little control over the energy efficiency of their house. “Rising electricity prices are the most obvious cause of high electricity bills, but the energy efficiency of your house is one of the largest contributing factors to overall energy consumption.”
ACTCOSS urged the ACT Government to implement minimum energy efficiency standards regulations for rental properties, a commitment in the Parliamentary and Governing Agreement.
“As the ACT moves towards net zero emissions, it is imperative that we see a just transition,” Dr Campbell said. “Today’s increase in energy costs is largely due to the ACT Government’s Large-scale Feed-in-Tariff scheme, a component of the ACT’s 100% renewable energy strategy. To ensure Canberrans with the least aren’t disproportionally affected, we need to make sure this cost is distributed equitably.”
Why have prices increased?
According to the ICRC’s annual update of regulated retail electricity prices, the prices of ActewAGL’s regulated (standing offer) tariffs can increase by up to 11.95%, based on changes in the costs of supplying electricity to small customers in the ACT.
The ICRC explained that prices rose because of the 36.91% increase in network costs, which reflects an increase the Australian Energy Regulator announced in May.
Higher transmission and distribution costs made up 2.7% of the increase in retail prices. The cost of the ACT Government’s scheme (including the large-scale feed in tariff) contributed 13.13% to the price increase. Scheme costs reflect the volatility of wholesale energy markets.
Partly offsetting higher network costs, wholesale energy purchase costs fell, taking 4.7% off the retail price increase. Wholesale energy purchase costs fell because of more renewable energy capacity and continuing low gas prices. Gas prices fell because fewer people want gas-fired generation, and because international LNG export prices are lower.
If standing offer prices increase by the full 11.95%, bills will increase by $3.76 per week for a typical Canberra household consuming 6,500kWh per year. For an average small business consuming 25,000kWh per year, the bill will increase $14.45 per week.
Despite the increase in regulated electricity prices, Senior Commissioner Joe Dimasi expected the average bill for Canberrans on standing offers to be in line with average standing offer bills in Victoria, New South Wales, and Queensland. However, care needs to be taken in making interstate comparisons as the regulated price increases mentioned only apply to standing offer tariffs.
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