Power prices set to rise in NSW following legal challenge

FAMILIES face the prospect of skyrocketing power prices after the Baird government spent millions of taxpayer dollars on a legal challenge that overturned big cuts to utility bills.

Picture illustrating rising electricity prices. Source: iStock

FAMILIES face the prospect of skyrocketing power prices after the Baird government spent millions of taxpayer dollars on a legal challenge that overturned big cuts to utility bills.

The Australian Energy Regulator (AER) slashed spending at publicly owned power companies in 2015 ­following years of splurging on “gold plating” infrastructure upgrades and staff perks that helped electricity prices almost triple between 1996 and 2015.

The determination, which took effect mid-2015, caused country-based Essential ­Energy household bills to fall about $313 a year and those at Endeavour Energy and Ausgrid to fall $106 and $165 a year respectively.

Small business bills fell by more than $500 a year.

The determination was on track to cost about 2500 jobs as power companies reined in ­operating expenditure, infuriating unions.

Energy Minister Anthony Roberts initially welcomed the AER’s decision but just a few months later, in a slap in the face to families across the state, the Baird government spent millions challenging it.

The Australian Competition Tribunal ruled today in favour of the government’s ­appeal, which was led by its Networks NSW agency.

NSW households could be hit hard by the power price rises. Picture: iStock

The ruling effectively scrapped big cuts to household power bills and told the AER to remake its determination.

“Every family, every pensioner, every small business in NSW will now have to pay more for power thanks to Mr Baird’s court action,” Opposition Leader Luke Foley said.

The Public Interest Advocacy Centre (PIAC), which ­argued against the government, said families face “significant risk of bill shock” once the AER’s ruling is remade — almost certainly increasing power prices, potentially with backdated charges to recoup revenue lost from July 1.

“This decision ... will inevitably lead to further hardship and disconnections, particularly in disadvantaged and vulnerable communities,” PIAC chief executive Edward Santow said.

The exact amount by which power bills could rise depends on how the AER remakes its ruling. A decision is not expected for months and no change to bills is expected until the new ruling is published.

AER boss Paula Conboy said “consumers will likely have to pay more than we thought they should”, while the Australian Competition Tribunal’s ruling also foreshadowed increased bills.

“Obviously, from the price perspective, the present issues raised by Networks NSW are not intended to reduce the price for the provision of electricity,” its ruling said.

The government privately leased network firm Transgrid in November for $10.3 billion and plans to lease majority stakes in Ausgrid by mid-2016 and Endeavour by late this year or early 2017.

Bids for Ausgrid will be finalised next week.