The great power price failure

POLITICIANS should reconsider the push for retail energy competition for the state's households, Tasmania's Council of Social Service says.

TasCOSS chief executive Tony Reidy says the failure to sell the Aurora customer base should be taken as an opportunity to reconsider the decision to introduce full retail competition in the state.

POLITICIANS should reconsider the push for retail energy competition for the state's households, Tasmania's Council of Social Service says.

The call comes after Deputy Premier Bryan Green admitted yesterday a bid to sell Aurora's customer base to new retailers had failed.

The sale of Aurora's customer base, a key plank of the State Government's energy reforms, would have paved the way for two new retailers in the state on January 1 and full retail competition on July 1. It could have also delivered the Government a war chest of between $260 million and $390 million in the lead-up to the state election in March.

But, as predicted by energy experts when the reform process began, new retailers have shown little interest in Tasmanian customers with no bids for the customer base.

TasCOSS chief executive Tony Reidy said yesterday the failure to sell the Aurora customer base should be taken as an opportunity to reconsider the decision to introduce full retail competition in the state.

"Evidence from other jurisdictions has demonstrated that prices will not necessarily fall under competition," Mr Reidy said.

"In fact, most have continued to rise."

Aurora has about 240,000 household and 20,000 business customers.

The announcement leaves the question of how taxpayers will pay for the $36.5 million that has already been spent on the push towards competition.

It also raises questions about the future of Aurora's retail arm, which was to retire after the sale of its customers.

Aurora workers met Mr Green yesterday. But the company was tight-lipped about its future, wanting a greater understanding of what that future will look like.

The failure to sell Aurora customers will set the company up for possible competition in the future.

The Opposition, which supported the move to retail competition, said householders would pay more in their power bills to cover the $36.5 million spent on the roll-out.

Mr Green denied the claims, repeating that Tasmanians should see still a 5.23 per cent drop in power prices at the start of next year.

Mr Reidy said the cost of reforms could hit all Tasmanians: "We have concerns about the impact of that cost on the Tasmanian Budget, including on the valuable health, education, community and other services that the Budget funds for all Tasmanians."

Mr Green told Parliament yesterday that selling Aurora customers needed to meet three objectives -- deliver competition in the electricity market, a fair and reasonable price, and the residual risks and liabilities to the state must be minimised.

"It is with disappointment that I inform the House that I have recently been advised that the divestment of Aurora's retail customers is unlikely to achieve these objectives ... " he said.

Treasury had told him "the current divestment process will (not) achieve a fair and reasonable price at this time for Aurora's retail customers".

Last October energy expert and managing director of Frontier Economics Danny Price told the Mercury mainland retailers would be scared of the local market.

Wholesale sector monopoly and concerns about the credit ratings of Aurora customers could scare off retailers.

"There is a risk that no one will go into the Tasmanian market," he said.