Koutsantonis sparks up over energy price hike
State energy minister Tom Koutsantonis says the Australian Energy Regulator isn’t capable of doing its job, after it passed on an power bill price rise to South Australian customers.
The Australian Energy Regulator yesterday released a decision to allow SA Power Networks to pass on $35.1 million in tree pruning expenses.
The regulator expects that decision to increase customers’ power bills by about 1.5 per cent – about $30 on an average yearly power bill, according to SA Power.
The role and expertise of the regulator needed to be reviewed, Koutsantonis told ABC Radio this morning.
“For mine, looking at it today it’s obvious to me that they don’t have the expertise to give good regulated decisions,” he said.
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“My department, the Department for Energy, I have never seen a bunch of bureaucrats more angry and disappointed with an independent regulated decision than this one. They are not happy.
“All the advice I’ve received from them is that this was a bad decision, a decision based on bad facts, a decision that’s not based on what’s actually going on out there.”
The State Government made a submission to the regulator opposing the price rise, the minister said.
SA Power Networks claimed the additional money was needed because of increasing foliage growth rates, after the breaking of the drought in mid-2010.
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The minister said the regulator should have factored the possibility of the drought breaking into the prices back when they were set in 2010.
“When you’ve got a national energy market you expect the regulator to make very, very good regulatory decisions because they impact on all of us.
“Quite frankly I think South Australians have had enough of all of these assets and rollout events being passed onto their bills … in a state where we know we go through drought and rain, drought and rain. It’s consistent.”
Australian Energy Regulator chair Andrew Reeves told the ABC the regulator set the price based on how much the network was spending during the drought years, with an expectation the price would be altered if the drought broke.
“The alternative was to try to make some anticipation of what the vegetation growth would be if the drought broke. No one knew when the drought would break.
“We made an allowance based on the vegetation cutting during a drought period and if the drought broke and there was excessive expenditure that would be looked at. That’s what’s happened.
“The rules and the determination allowed for a recognition of this type of unexpected expense. Normally we would say that this is the sort of cost that should be worn by the businesses but in this case we’ve made an allowance based on much lower rates of expense during that drought period.
The rise will be included in next year’s electricity bill.
The network currently spends around $21 million a year on vegetation management.
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