Power play: Premier rolls out $175 electricity rebate to head off price slug
The Palaszczuk Government has moved to avert a huge slug to electricity consumers after a national regulator handed down a decision that could have meant double digit increases to power bills.
Premier Annastacia Palaszczuk has said she will quit the role. (AAP Image/Jason O'Brien)
The State Government announced it would increase its cost-of-living hand out from $50 to $175. The relief payment will be in the form of a rebate on the next power bill and would cost about $385 million.
It followed a decision by the Australian Energy Regulator to increase the standing offer electricity price in south east Queensland by between 11.3 per cent and 12.6 per cent, or 5.5 per cent to 6.8 per cent above inflation. While high, it’s less than the 18 per cent in NSW.
Premier Annastacia Palaszczuk said rising fuel and grocery prices were taking a toll especially on those on low incomes.
“People are having to make difficult choices including going without,’ the Premier said.
“The $175 cost of living rebate will make life just that little bit easier and brings to $575 the dividends Queenslanders have received over the past four years.”
In February, the Government announced a $50 rebate on power bills, which it said was only possible because it owned the generators, the transmission and the distribution assets.
“With wholesale prices going up due to global instability, we have moved to raise it to $175 because we know the pressure Queenslanders face,” Palaszczuk said.
“Electricity providers will automatically apply the credit, so Queenslanders don’t have to apply.
Treasurer and Minister for Investment Cameron Dick said addressing cost of living issues was at the core of the government’s priorities.
“At a state and federal level, Labor governments govern for people who are doing it tough,” the Treasurer said.
“This $385 million investment will be of most help to people who are disadvantaged, people who need help from rising prices, people who were left behind by the Morrison Government.”
The Opposition said the $175 would do nothing to avoid the long-term increase in energy costs.
“This so-called rebate is typical of this Government, which is only focused on how things look, not how things actually are,” LNP shadow minister Pat Weir said.
The Australian Energy Regulator released its default market offer report this morning after it was delayed by the Morrison Government until after the election. The default market offer is the maximum price a retailer can charge on a standing offer. Only 10 per cent of consumers are on standing offers, but they set a benchmark for all other pricing in the market.
A major factor in the increases has been spiralling costs of coal and the lack of generation supply which was impacted by the shut-down of the Callide C generator in central Queensland a year ago.
There has also been a slowdown in new investment, which has been blamed on the lack of clear federal government policy on renewables and emissions. The AER said hedging by retailers had also increased costs.
“These conditions have persisted and been compounded by the ongoing ware in Ukraine which has led to significant pressure on coal and gas supply globally; extreme weather in NSW and Queensland, which has affected coal supplies and electricity demand; and further unplanned outages at multiple generators.
“As a result there have been very significant increases in wholesale futures prices for all default market offer regions but particularly NSW and Queensland.
AER chair Clare Savage said this year’s DMO determination was a particularly difficult decision as the regulator sought to balance the additional cost pressures on consumers with ensuring retailers could recover their rising wholesale and network costs.
“In setting these new DMO prices, we understand the significant impact they will have on some consumers who may already be struggling with cost of living pressures,” Savage said.
“We have given scrutiny to all factors affecting the DMO calculation and have set safety-net prices that reflect the current conditions and underlying costs to retailers.
“Setting the DMO is not about setting the lowest price.
“We are required to set a price that will allow retailers to recover their costs, earn a reasonable margin and support retailers to compete and offer better deals and products in a competitive retail environment. If a large number of retailers are unable to recover their costs and are forced to exit the market – as we have seen recently in the United Kingdom – that will add more cost to consumers.