The State Government has rejected an Office of Energy recommendation increasing residential electricity prices by 47 per cent in 2009-10 and 15 per cent the following year.
Instead, Premier Alan Carpenter reaffirmed today that domestic electricity charges would remain unchanged for a further 15 months. There would then be a 10 per cent increase in 2009-10, with further annual increases to be phased in over a six to eight-year period.
“The State Government will also provide $780million over three years as a subsidy for electricity consumers.” Mr Carpenter said.
The Office of Energy report on electricity prices released today says prices should increase by 47 per cent in 2009-10 and 15 per cent in 2010-11 to match the huge increases in the cost of supplying electricity.
But the Premier said such a move would cause too much pain for ordinary families and households.
“Everybody accepts that prices will rise,” he said.
“Climate change and the rising cost of generating electricity means prices must increase.
“However, this Government will not be exposing families and householders to such big increases all at once.
“We will implement a series of staged price increases that will ensure Western Australians have the opportunity to adjust to the increased prices.
“We will also be launching an energy efficiency campaign that will help educate people about reducing energy consumption.”
Mr Carpenter said the State Government would provide additional support to the most financially disadvantaged households by introducing a $24.4million package of new measures to tackle ‘utility’ hardship.
He said the package would include more financial counselling, grants to assist those in genuine financial hardship and energy efficiency initiatives to lower power bills.
Concession holders would also have their energy rebates increased in-line with tariff increases, costing another $23.9million over three years.
The Premier said the $780million subsidy would allow for the shortfall between the cost of providing electricity and the price permitted to charge householders.
“We forecast the first of those payments, in 2009-10, will be $273million,” he said.
Except for the introduction of the GST, the 2009-10 tariff increase will be only the second in 17 years.
Significant cost pressures on electricity generation included:
· increased price of fuel, including diesel;
· replacing ageing plant and equipment with more expensive and modern infrastructure; and
· rising labour costs which have increased by more than 47 per cent since residential electricity tariffs increased in 1997-98.
Mr Carpenter said the review had also highlighted climate change issues as having a significant impact on the cost of electricity generation.
“Renewable energy is more expensive,” he said.
“The review considered the impact of a national emission trading scheme in 2010-11.
“While estimates had been made on the costs of the scheme, the Office of Energy was advising Government that given that the scheme was still in the early stages of development, there was considerable uncertainty around these estimates.
“Tariff increases in subsequent years will need to be determined down the track when we better understand some of the uncertainties, such as future carbon pricing.
“While the Government is keen to help customers as we move to sustainable prices, care must be taken to not undermine the intent of important environmental measures such as emissions trading.
“We clearly have challenges ahead with rising energy costs, but individuals can minimise these costs by taking action to reduce their use.”
Public comment is invited on the Office of Energy’s report, which can be found at http://www.energy.wa.gov.au
Premier’s office - 9222 9475
Energy Minister’s office - 9222 8950