Price cut proposed for some power customers
About a quarter of South Australian electricity customers could pay a lower rate for power from next year.
The Essential Services Commission of South Australia (ESCOSA) has proposed a reduction for wholesale electricity costs applying to standing AGL contracts, which equates to a $160 annual saving for the average customer.
While a final determination is to be made in December, if the reduction is approved, it would take effect from the start of 2013.
The lower rate would apply to small businesses and households with standing contracts with AGL, which are price regulated by the Commission, but not market contracts with AGL or other retailers.
Commission CEO Paul Kerin said the price cut followed a review of wholesale costs.
“ESCOSA proposes an 8.1 per cent standing contract price reduction, which we anticipate will reduce an average household’s bill by around $160 a year,” he said.
“We have done this because the estimate of wholesale costs now is lower than the current wholesale cost allowance.
“The wholesale cost represents about a third of a typical residential electricity bill, so the proposed reduction will have a visible impact next year for those on standing contracts.
“This would benefit customers who have seen electricity prices rise quite significantly over the past three years.”
Premier Jay Weatherill welcomed the proposed savings, but said everyone should be entitled to savings on their power bills, not just those on the standing AGL contracts.
“We call on the energy retailers to pass this on to the rest of their customers,” he said.
The South Australian Council for Social Service (SACOSS) has encouraged the Essential Services Commission to stick to its guns and not be swayed by electricity retailers.
“This draft Electricity Standing Contract Price Determination is a huge win for around 200,000 South Australians currently on standing contracts,” said Ross Womersley from SACOSS.
“The proposal announced by ESCOSA today, could see consumer savings of up to $30 million this year alone.
“If approved, we would expect to see the benefits of the determination flow on to all other customers, including those on fixed price contracts, within the next 12 months, which could see the savings reach upward of $100 million.”
While many have welcomed the announcement of possible savings, the Energy Supply Association of Australia (ESAA) has said the rate reduction is not in the long term interests of South Australians.
"Competition, not regulation, is what will drive better deals for South Australian electricity customers,” ESAA chief executive Matthew Warren said.
“This decision will not make the cost of supplying electricity to South Australian households any cheaper.
“It will just wallpaper over the underlying problems of rising peak demand and other key factors which will continue to push up the cost of electricity.”
