New draft pricing index released by market regulator

Mines and Energy Minister Geoff Wilson said that a new draft pricing index for electricity was released today by the Queensland Competition Authority, the market regulator.

The timing of its release was pre-determined by the Queensland Competition Authority because of the market-sensitive nature of the information.

Minister Wilson said that according to the QCA’s draft determination, the price cap on the uniform electricity tariff would increase by up to 10% from 1 July.

“Despite the increase, the cost of electricity in Queensland will still be reasonable. For a household with a quarterly bill of $300, this represents an increase of around 30 cents a day,” Mr Wilson said.

The Queensland Competition Authority advised that a number of factors were taken into consideration when it set the new pricing index.

“The drought has had an impact on electricity generation in the national electricity market, not only in Queensland, but also in New South Wales, Victoria, and the Snowy River Hydro Electric Scheme.

“There has also been a billion dollar increase in capital expenditure in Queensland’s rapidly growing electricity network.

“Two years ago, the Queensland Competition Authority, the market regulator, made allowance for Ergon Energy and Energex to make major investments in energy infrastructure to strengthen the network.

“A massive $6.2 billion is being invested in infrastructure over five years, to ensure a reliable and secure power supply for people who live and work in Queensland.

“These two factors are further compounded by a shortage of skilled labour and increases in the cost of materials used in building poles, wires and infrastructure.

Mr Wilson said the QCA’s recommended increase in the price cap would come into effect from 1 July. The QCA’s draft determination is now open to public consultation. Submissions can be lodged with the Queensland Competition Authority up until the 23^rd May.

The introduction of full retail competition also starts on 1 July.

“This will create opportunities for residential and small business customers to take advantage of discounts expected to be offered by energy retailers in the market competing for their custom.

“Customers can continue to be supplied with electricity at the price capped electricity tariff from their existing retailers or they can choose a cheaper deal from those expected to be offered by energy retailers.

“The best advice is for customers to shop around. Customers in regional Queensland will continue to have the added protection of subsidies.

“In the last financial year, the State Government provided subsidies of more than $360 million for Ergon Energy customers – that’s around $580 for each customer a year.

“The State Government will continue to provide people with access to affordable electricity no matter where they live,” Mr Wilson said.

8 May 2007 Media Inquiries: Ellen McIntyre 3225 1819