Australian Energy Regulator approves SA Power Networks bid to increase power bills

Increased power prices have been approved by the regulator but the reasons behind it are surprising.

Increased solar power and improved energy efficiency are benefiting some SA households but is forcing up average electricity prices.

The Australian Energy Regulator on Wednesday approved a price increase averaging $59 on residential bills proposed by distributor SA Power Networks for next financial year.

The regulator accepted that as well as inflation it should account for SA Power Networks making less revenue than earlier expected because of declining demand.

Nearly a third of SA’s 780,000 residential customers and 10 per cent of the 98,000 business customers now have solar photovoltaic panels.

This investment plus more energy-efficient appliances and customers cutting energy use in response to high retail prices meant less electricity was being sold.

SAPN is being allowed to “top up” its tariffs because pricing frameworks are set over five-year periods, with 2019-20 being the last of a period that began on July 1, 2014.

Energy and Mining Minister Dan van Holst Pellekaan.

Back then, the regulator determined SAPN could recover $3.8 billion over the five financial years and this allows it to catch up with that target even though sales fell short of expectations.

Energy and Mining Minister Dan van Holst Pellekaan said “fortunately for consumers, the AER has confirmed that wholesale prices have reduced”.

The final, net effect, on bills would therefore be less than average $59 — or 3.2 per cent — increase approved yesterday. The net increase is likely to be about 0.5 per cent or $11.

SAPN had asked for a $46 increase for its own distribution and metering services plus recovery of a $6 increase for transmission charges from ElectraNet and Murraylink and $7 for the State Government’s solar feed-in tariff scheme. SAPN collects the latter charges from retailers and passes them through.

It has long argued the network has to be structured to meet short, sharp demand peaks.