Morrison’s push to lower power prices fails

A Morrison government campaign to lower household electricity prices is failing to deliver widespread cuts.

Australian Energy Minister Angus Taylor.

A Morrison government campaign to lower household electricity prices is failing to deliver widespread cuts, with electricity retailers holding or increasing ­prices as they battle rising costs.

Only AGL Energy — targeted earlier by the government with demands to sell its Liddell coal generator rather than close it in 2022 — offered a cut yesterday on its 2019 pricing in Victoria. Its standard price will fall 1.6 per cent, saving an average household $23 a year and a small business $60.

Eastern states newcomer Alinta Energy, one of the smallest companies in the market, led the way with a 1.9 per cent increase for electricity and 7.1 per cent for gas.

But Origin Energy and Energy­Australia held standard retail tariffs flat, saying they would absorb millions of dollars in costs they did not control.

As the government prepares to introduce legislation next week enacting the power to force big owners of electricity and generation businesses to sell assets if they don’t bring prices down, the Business Council of Australia and big corporate customers accused the government of adopting Greens policies.

However, federal Energy Minister Angus Taylor said the government’s campaign for lower prices was working, with more than 458,000 Australian families and 39,000 small businesses getting a better deal as they were moved off “standing offers”.

More companies announced moves to shift a small percentage of customers away from “standing offer” prices via discounts, saying they were unable to afford big cuts to standard prices because of the rising cost of green schemes, and regulatory and network costs.

Household electricity bills rose 16 per cent to $1824 in 2017-18, ­according to a report this week from the Victorian Essential Services Commission.

Origin chief executive Frank Calabria said the only way to achieve more substantial price cuts was for “urgent progress on a co-ordinated climate and energy policy”.

EnergyAustralia said rising costs should have resulted in a $39-a-year increase in bills for its 475,000 residential customers but it would absorb them at a loss of $15 million in annual revenue. Its chief customer officer, Chris Ryan, said political pressure was “definitely a factor” in the company deciding not to pass on increased costs via higher bills.

David Leitch at ITK Consulting said Victoria was among the most competitive energy markets in the country, and “if retailers held or increased ­prices, it’s likely because they had to”.

Grattan Institute director Tony Wood said moves by companies to offer discounts to customers on standing offers — the reference rate on which market discounts are calculated — was welcome. “If the companies had done it two years ago, they probably could have avoided this mess,” he said.

Green scheme costs — which include subsidies to households that install rooftop solar — were the biggest component of the increased costs calculated for 2019.

Mr Ryan said the Small-scale Renewable Energy Scheme was a subsidy to householders who could afford to install solar panels that raised prices for all consumers. The government is scheduled to table its “big stick” legislation in parliament next week that would give Josh Frydenberg power to force energy companies to divest assets if they price gouge or act in an uncompetitive manner.