Home and business electricity price increases begin to slow in 2013

Review of Regulated Retail Prices for Electricity (IPART Final Report June 2013)

From 1 July 2013 to 30 June 2016:

The average regulated price increases in 2013/14 are substantially lower than

those in recent years. This is due to:

 Much lower changes to network costs in this year, following 4 years of large

network price increases. Network costs (excluding the climate change fund

levy) in 2013/14 will decrease in real terms in the Ausgrid3 and Endeavour

Energy area, and decrease in nominal terms in the Essential Energy area.4 We

expect that revised policy and governance arrangements will result in

moderate network cost changes over the medium term.

 Relatively stable green scheme costs, following the one-off effect of the

introduction of the carbon pricing mechanism last year. Costs associated with

the carbon pricing mechanism and the Renewable Energy Target are broadly

stable in this year. We expect the costs associated with the small-scale scheme

under the Renewable Energy Target will fall over the coming years as the

impact of generous solar subsidies in the past declines. However, the costs

associated with the large-scale renewable generation under the Renewable

Energy Target are likely to continue to rise.

As Figure 1.1 shows, the main drivers of the average price changes for 2013/14

are higher retail costs (including the costs of customer service5 and the costs of

acquiring and retaining customers in the competitive market) and lower

generation costs. However, this partly reflects a reallocation of costs from the

generation to the retail cost categories.

The result of these changes in costs will add around 1.7% to average prices across NSW.

3 EnergyAustralia is the Standard Retailer in the Ausgrid network supply area.

4 Including the climate change fund levy, the Ausgrid and Endeavour Energy network charges will increase in nominal terms by 2.5% and 0.86% respectively, and the Essential Energy network charges will fall by 2.95%.

5 For example, this includes the costs of billing and handling customer inquiries........