Experts savage Steven Miles’s plan for new Queensland-owned energy retailer

Steven Miles’s claim that a new state-owned electricity retailer would slash power prices in Queensland has been shot down by economists and energy experts who say the policy is superficial.

Queensland Premier Steven Miles visits Caneland Central shopping centre on Wednesday. Picture: Adam Head

Queensland Premier Steven Miles’s claim that a new state-owned electricity retailer would slash power prices has been shot down by economists and energy experts, who say the policy is superficial.

The Labor leader on Wednesday announced he would intervene in the energy market if re-elected, creating a second publicly owned retailer to compete against its existing Ergon Energy.

“We estimate it could save consumers up to 6 per cent on their energy bills, which is the regulated profit margin for non-publicly owned generators,” he said. “We know more competition equals lower prices, and we know that publicly owned government corporations can compete against each other to deliver that competition.”

Setting up a new retailer, which would be a subsidiary of the government’s Energy Queensland, would take a year and cost about $1.4m on Labor’s estimates.

Economist Joe Branigan, a former Treasury official, said a new government-owned retailer would not reduce prices through competition because the regional price was already regulated by the Queensland Competition Authority and there was no monopoly profits to compete away.

“Not only that, the retail component of the price, which is the cost of preparing and sending the bills and the call centres, is only a small fraction of the total cost of electricity,” said Mr Branigan, director at director of Tulip­wood Economics.

“Even in Southeast Queensland, if a new government-mandated competitor reduced the return to retailers, it would only lower the price of electricity by 1 to 2 per cent.

“This is because most of the cost of electricity is in the generation and transmission and climate-change costs.”

Grattan Institute’s deputy director of energy program Alison Reeve said shareholding ministers of Ergon Energy, Treasurer Cameron Dick and Energy Minister Mick de Brenni, already had regulatory power to reduce energy prices.

“So if the minister wants prices to be lower in regional Queensland, he can just regulate them; I’m not sure why he has to set up a second body in order to do that,” she said.

“Because as a consumer, I don’t necessarily want choice I just want my price to be low.”

Ms Reeve said Labor’s policy lacked detail.

“On first blush, I think they would be doing it because they are having a cost-of-living election and power prices have gone up a lot in the past couple of years because the price of coal and gas has gone up,” she said. “On the surface it looks like it would help bring your prices down, but I think once you got into actually implementing it, you probably end up being disappointed.”

Business Chamber Queensland CEO Heidi Cooper said a new retailer would do little to put genuine downward pressure on energy prices, but instead create another layer of bureaucracy. “Another state-owned body is anti-competitive, inefficient and interferes in the free market,” she said.

Liberal National Party leader David Crisafulli labelled Labor’s proposal a “desperate thought bubble” that did not address the fundamental flaws in the system that had contributed to higher power prices.