Poles and wires firms face price-gouge probe, compo claims

Bill Shorten has called for energy companies who have allegedly been caught gouging customers by as much as $400 million a year to refund “every cent”.

Federal Minister for Energy and Environment Josh Frydenberg. Picture: AAP

Bill Shorten has called for energy companies who have allegedly been caught gouging customers by as much as $400 million a year to cover inflated corporate tax liabilities to refund “every cent”.

The Labor leader’s call comes after the Turnbull government today asked the Australian Energy Regulator to review the extent to which customers are being overcharged, amid suggestions power network and gas pipeline companies are collecting at least three times as much from customers as they need to cover their corporate tax liabilities, costing the average household an extra $40 a year.

Mr Shorten said Australians did not want another review, rubbishing Prime Minister Malcolm Turnbull’s comment this morning that the companies may have to pay compensation.

“They want action,” he said.

“We’ve heard from Mr Turnbull periodically, he likes to boast that he’s called the energy companies in, I think he says he has fixed price rises a number of times.

“The conduct of big energy companies gouging prices off everyday consumers is a test of Mr Turnbull’s authority and sincerity.

“Every cent that consumers have been overcharged should be refunded, and this arrogant behaviour of large corporations treating consumers like mushrooms and keeping them in the dark, this has to stop.

“No more cups of tea with the big energy companies. Action now. Action speaks louder than words.”

Energy firms ‘may face compo’

Malcolm Turnbull says power companies who have been caught gouging customers by as much as $400 million a year to target their corporate tax liabilities may be forced to pay compensation.

The government has today asked the Australian Energy Regulator to review the extent to which customers are being overcharged, amid suggestions power network and gas pipeline companies are collecting at least three times as much from customers as they need to cover their corporate tax liabilities, costing the average household an extra $40 a year.

The Prime Minister said the government had already been pursuing a “step by step” approach to bring down power prices.

“One of the things we’ve already achieved and legislated, for example, is to abolish the right of the network companies, these are the people that own the poles and the wires, to keep on appealing against decisions of the regulator on how much they can charge for their assets,” Mr Turnbull told Melbourne radio station 3AW.

Asked whether consumers would get back money found to have been overcharged, Mr Turnbull said it was possible companies would be obliged to pay compensation.

“I’m not sure whether it can be recovered, but it certainly, if they are charging for costs they don’t have they may well be obliged to pay compensation, but it will certainly be stopped in the future,” he said.

“It’s being investigated. Let’s not get ahead of ourselves, but it shows you the attention that we’re paying to ensure that we put at every turn, at every lever, downward pressure on energy prices.

“I think the most important thing is to get action now and we have made some big steps. “We’ve got greater availability of gas on the East Coast, no thanks to the Victorian government which of course won’t allow gas to be developed in Victoria, notwithstanding there is a lot of gas here.

“But we’ve taken very strong measures to ensure that there is more gas supplied on the East Coast. That has brought wholesale gas prices down, and that puts downward pressure on electricity prices and of course on residential gas prices as well.”

Poles and wires firms face price-gouge probe

Energy Minister Josh Frydenberg has commissioned an investi­gation into price gouging by up to 21 businesses that own the poles, wires and pipelines that deliver energy to Australian consumers.

The government is concerned some of these network businesses are unnecessarily hitting customers for hundreds of millions of dollars in extra costs by gaming Australia’s energy market.

The Australian understands some network business are collecting three times as much from customers as they need to, with suspected price gouging amounting to as much as $400  million a year. Network costs are the largest part of a consumer’s power bill, with the government keen to ensure energy consumers are not being overcharged by unscrupulous energy distributors intent on boosting their profits.

Mr Frydenberg will today warn that analysis by the Australian Taxation Office suggests network businesses are overcharging consumers in an attempt to cover their corporate tax liabilities.

Regulated energy network prices are set by the Australian Energy Regulator at a level that allows businesses to cover their tax liabilities while also delivering a commercial return.

The regulator says it sets prices so consumers pay no more than necessary. Every five years, the regulated network businesses must apply to the AER to have their revenue needs reassessed.

But Mr Frydenberg argues the ATO analysis between 2013 and 2016 has “revealed a discrepancy” between tax allowances set for network businesses and the amount those businesses pay. The Australian understands that under this framework, electricity network and gas pipeline businesses receive almost $600m a year from customers to cover their corporate tax liabilities.

This could be up to three times as much as they need to cover their liabilities. The ATO data suggests the total tax paid by network businesses over the period 2013 to 2016 was only a fraction of the tax allowance they received.

Mr Frydenberg has asked the AER to investigate the discrepancies between the tax allowances and tax paid. The AER will also review how it models tax costs and make changes before the next round of revenue determinations, due in April 2019.

The government will consider changes to the national electricity and gas rules that regulate electricity networks and gas pipelines.

“This review complements action already taken to fix the regulatory framework, including abolishing the limited merits review regime, which allowed network businesses to increase electricity bills by around $6.5 billion through the appeals process,” Mr Frydenberg said.