Some Victorian residents will pay around $50 more on electricity bills in 2020. Small businesses could be paying four times that amount. Everyone will pay more to some extent.
The warning comes after the Australian Energy Regulator (AER) approved revenue-raising increases for Victorian electricity distributors this week.
The AER sets the revenue amount distributors can recover from customers through electricity bills. Electricity distribution costs — maintaining the ‘poles and wires’ — can make up to 50% of an electricity bill. This network tariff is included in electricity bills, along with wholesale power costs and retail margins.
Here’s what the AER estimates is a typical network charge increase in the average Vic bill in 2020, listed by distributor:
- AusNet Services (residential $38.16, small business $130.02)
- CitiPower (residential $26.14, small business $115.00)
- Jemena (residential $37.26, small business $200.89)
- Powercor (Residential $46.00, small business $99.28)
- United Energy (residential $53.04, small business $212.27)
Victorian network tariff has been low
AER chair Clare Savage says Victorians have benefited from lower network charges in the past years.
“Our first principle is that consumers should pay no more than necessary for safe and reliable energy,” she said.
“Over the last five years, most Victorian consumers have paid less or around the same for the network of poles and wires delivering power to their houses and business.”
The AER has previously taken distributors to court after they challenged AER’s revenue raising limits.
In 2017, the Turnbull Government increased the AER’s funding to boost its effectiveness in the market, stating:
“We will stop big electricity companies from running to the courts to try to overturn the Australian Energy Regulator’s decisions. Companies have made 52 appeals and the courts have ruled against consumers 31 times. This will end.”
Price increases from January 1, 2020
Network charges cover the transmission and distribution costs of delivering electricity to households and businesses. These include new transmission poles, cabling, substations and the maintenance of existing networks from generator to street kerb.
The AER says these costs are increasing for Victorian electricity distributors. It says land taxes and more power travelling long distances from interstate, which increases costs, have contributed to the rise.
Most Australians have a connection to the electricity grid and must pay the increased network charges. However, it’s easy to reduce wholesale and retail bill charges by using less grid power – or preferably, none at all.
As power prices increase, rooftop solar power is a sure-fire way to reduce your electricity bills. If you want to cut your power bills in 2020, get in touch with Solaray’s solar experts to find out what size solar system you need.