According to the newly appointed Energy Minister Ben Wyatt, power prices should match the cost of delivering the service, which currently stands at 20 per cent above the average household bill.
Mr Wyatt, the new Energy Minister claims he’s fully aware of the cost implications electricity prices would have on the State budget in the event they are subsidised.
While speaking to The West Australian, Mr Wyatt said the alleged cost-effective tariffs had become the “Holy Grail” of power policies in Western Australia.
Even though he emphasized the gap ought to be bridged “slowly and carefully”, the Energy Minister still insisted he was so much aware of the burden that subsidising power prices placed on the shoulders of the government.
This proposal comes at a time when the Federal Government is evaluating energy prices in all Australian States except WA, despite Perth households recording the greatest power cost increases than any other city since the era of carbon tax came to an end.
Power being sold below true cost
Popularly referred to as the tariff adjustment payment, Western Australia’s electricity subsidy is normally paid to Synergy, a State-owned retailer, in a bit to offset losses made as a result of selling power. The losses arise because the company is compelled to sell power to residential customers at a cost that is below the true cost of producing and supplying the power.
Apparently, households pay electricity bills ranging between 15 and 20 per cent below the cost offered by Synergy, hence creating need for a subsidy amounting to $300 million in this financial year as per the Budget figures.
The Energy Minister, who’s also the Treasurer, added that while he supported cost-reflective prices, he was not in a position to outline a specific timeframe for implementing these proposals.
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When asked to state whether power costs would rise and by how much from July 1, a time when service charges were bound to change, Mr Wyatt declined to comment but said, “As Treasurer, I’m very aware of the impact of the subsidy on the finances,”.
New figures indicate that many of us are unaware that the various subsidies have an expiry period.
“I will say … cost reflectivity is the Holy Grail but something that has to be reached carefully and slowly and in mind of the impact on households.”
“We will be making a decision on fees and charges soon because they’ll have to be gazetted. But I note that the Budget is predicated on a 7 per cent rise in 2017-18.”
The forthcoming Australian Competition and Consumer Commission review is expected to scrutinise how electricity retailers behave. However, the evaluation would not affect WA despite its prices increasing by 9.4 percent in Perth since mid-2015.