The Guardian November 5, 2003


"Competition" to hit South Australian gas consumers

by Bob Briton

Less than 12 months after being hit by sky rocketing electricity 
bills, South Australians are set once again to feel the full 
brunt of competition, deregulation and privatisation. This time 
it is their gas bills that are about to rise. And it will only be 
a matter of time before the rest of Australia follows.

Essential Service Commission chairman Lew Owens has warned South 
Australians that they will pay up to 20 percent more for their 
gas next winter when the market is opened up for competition 
between retailers. The cost of new computer systems and 
structures supposedly needed before other corporations can move 
into the market is the reason given for the price spike. All 
these additional costs will be passed on to consumers plus a bit 
extra to cover for profit margins.

The increase would see average household bills rise from around 
$470 to $560 per annum. The same households have already been hit 
with an average 26 percent increase in electricity charges since 
January when a fully deregulated, free market in electricity was 
introduced.

Mr Owens also warned that electricity charges are not likely to 
come down in 2004. It seems that lower wholesale electricity 
prices have been offset by increased transmission costs.

Many SA households are already in trouble with their power bills. 
AGL reports that 3000 of their customers are on special payments 
plans because they cannot pay their bills in one hit. The SA 
Council of Social Service said that their financial advisers were 
fully booked up and that there is a two-week waiting list for an 
appointment.

The Electricity Industry Ombudsman Nick Hakof notes that 
complaints from electricity consumers have doubled in the past 12 
months. Many protest that they cannot afford to pay their bills. 
"Although this office does not have jurisdiction to deal with 
prices, many consumers contacted my office to express resentment, 
anger and suspicion", he told the Adelaide Advertiser last week.

The entry of the NSW government-owned Energy Australia to SA 
markets is not anticipated to bring relief and it now seems that 
the SNI interconnector to the power-rich NSW grid will not go 
ahead.

The Murraylink interconnector between Red Cliffs in Victoria and 
Monash in SA has been given regulated status by the ACCC instead. 
Power users in Victoria and SA will pay a $107 million subsidy to 
the Murraylink Transmission Company over the next 10 years. That 
cost will also be added to their electricity bills.

Mr Owens has said that the only way that households could bring 
their bills down is to shop around among the deals on offer from 
AGL's competitors, TXU and Origin Energy.

This can be a mind-numbing experience. The Council on Ageing is 
offering advice to elderly people on the confusing offers 
available. What is a good deal for one customer may not be a good 
deal for another. Factors, such as peak and off-peak usage must 
be examined. So far only 7000 households have bothered to switch 
from the previously regulated monopoly supplier, AGL.

The Advertiser gave the example recently of the Freemans, 
a Golden Grove family whose quarterly electricity bill just broke 
through the $500 barrier. Astrid Freeman rang around and found a 
deal from TXU that would save the family $30 ... for now. This is 
as good as it gets.

The Liberals are again talking tough about the behaviour of 
corporations from the safety of the opposition benches. In 
relation to the looming increase in gas charges, energy spokesman 
Wayne Matthews said that if the entry of TXU and AGL into the 
market currently monopolised by Origin Energy will not bring down 
prices, then competition should be delayed.

The Energy Minister should consider directing the Essential 
Services Commission to use its powers under the Gas Act to set 
prices no higher than the present ones, Mr Matthews maintains.

Neither Liberal nor Labor is calling for an increase in social 
security payments or wage rises so that workers can afford to pay 
these bills. Nor of course are the employers.

Furthermore, the Libs are recommending that SA should forego 
"competition payments" from the Commonwealth if that is the cost 
of protecting SA gas consumers. In government, the same Liberals 
used the "competition payments"  rewards for privatising and 
deregulating the people's property  as an excuse for ramming 
through its more obnoxious legislation.

Back to index page