Opinion: Qld energy system flawed and needs overhaul

You know a sector is bloated when big players cut their prices by 40 per cent, yet go on to record multi-hundred-billion annual profits, writes federal MP Ted O’Brien.

THE Queensland Government has the power to take decisive action to reduce electricity bills.

This was evident when wholesale prices dropped a whopping 40 per cent after minister Curtis Pitt caved in to Federal Government pressure last year and instructed government-owned generators to drop their prices.

AGL to give price cut

ACCC to monitor bills

You know a sector is bloated when big players like Stanwell and CS Energy cut their prices by 40 per cent, yet go on to record windfall annual profits of $490 million and $441 million respectively. Moreover, for consumers, this produced just 1.3 per cent off the price of power.

Regional Queensland cops the worst of it. If you live anywhere north of Gympie or west of Helidon, you have to buy your electricity from State Government monopoly retailer Ergon Retail.

As a public-sector entity, you’d think Ergon might pass on the enormous drop in wholesale prices. But no such luck. They don’t even provide pay-on-time or similar discount schemes enjoyed by electricity users elsewhere.

Meanwhile, the Queensland Government signs a cheque for nearly half a billion dollars each year to subsidise electricity in regional areas, but who exactly benefits from this largesse?

The funds don’t go to customers or electricity generators. Instead, they go to Ergon Retail, giving it a cost advantage and discouraging other retailers from entering the market.

It’s not just residential customers who are being ripped off. About 77 per cent of business customers on Ergon’s tariff 20 could be paying less for their electricity, but many are unaware that a more suitable tariff exists. Of course, the Queensland Government knows this, but it stays silent.

It’s no wonder complaints to the Ombudsman have increased by a third. There were 8838 complaints about prices and supply last year with $912,713 repaid to aggrieved customers.

The silhouette of the evening electricity transmission pylon. Istock

Meanwhile, these same customers, like the rest of us, were charged through their electricity bills last year to cover over a million dollars in bonuses for executives of state-owned utilities.

Big unions are also an integral part of the picture. The public will never know the compromises made for the unions in Enterprise Bargaining Agreement negotiations and board appointments, but the donations that pour into the Labor Party from energy sector unions suggests they’re getting value for money.

The unions aren’t entirely happy though. They’re nervous that Labor’s 50 per cent Renewable Energy Target will lead to privatisation of the industry by stealth, as most investment in renewables comes from the private sector.

This explains the Premier’s olive branch to the unions in the announcement of $250 million for a new company called Clean Co, which, despite the hype, trades in union-dominated assets.

Naturally, keeping this going isn’t cheap. It takes money, which is where big taxes come in. Secret energy taxes are made possible because the State Government is both owner and
rule-maker.

Despite energy being squarely a state issue, the Federal Government has been doing what it can to reduce electricity prices. We have gotten rid of the carbon tax, reduced the RET, reined in the networks, put more gas into the market, increased transparency for customers, announced Snowy 2.0 and put downward pressure on wholesale prices.

If there’s one big mistake we’ve made, it’s letting the Queensland Government off the hook. That changes today.

Ted O’Brien is the federal Member for Fairfax