Average Western Australian households are facing an extra 21 per cent increase in electricity charges between now and July 2011 under tariff hikes approved by the Economic Regulation Authority.
Average Western Australian households are facing an extra 21 per cent increase in electricity charges between now and July 2011 under tariff hikes approved by the Economic Regulation Authority.
The ERA today ruled Western Power could increase the tariffs it charges for access to the state's main electricity grid three times over the period, with each increase expected to average 16.3 per cent.
Access tariffs make up about 40 per cent of the average household electricity bill.
ERA chairman Lyndon Rowe said the increases, which will take effect in March 2010, July 2010 and July 2012, would push the average electricity bill up by around 7 per cent each time if passed on in full to consumers.
However, the extent of the actual increases will depend on the state government, which sets tariffs for residential customers.
Earlier this year, state energy minister Peter Collier approved a 26 per cent increase in household power bills in a move toward cost-reflective pricing to address two decades of artificially subdued home power charges. In October, he said a similar increase may be required next year.
The ERA's decision allows Wester Power to raise transmission tariffs by 12.9 per cent and distribution tariffs by 17.7 per cent at each of the three milestone dates in the access arrangement covering the three year period to July 2012.
While the increase is more generous than under the ERA's interim ruling released in July, Mr Rowe said it was still significantly lower than Western Power's original submission seeking approval to raise tariffs by more than 40 per cent.
Under the ruling, the ERA has allowed Western Power to achieve an average rate of return of 7.98 per cent on its capital base, compared to its requested return of 8.95 per cent. In its interim ruling, the ERA capped the rate of return at 7.06 per cent.
The ruling will allow Western Power's total annual revenues rise by 70 per cent in 2012.
The regulator also approved a 50 per cent increase in Western Power's spending on network upgrades and maintenance to $4.8 billion over the next three years. In comparison Western Power spent only $3.3 billion on upgrades and maintenance in the the three years after disaggregation.
Mr Rowe said the increase reflected the clear need to upgrade Western Power's creaking network of power poles and transmission lines, but warned the regulator expected the funds to be enough for Western Power to get its house in order.
"We accept there's been a need for catch-up, that there has been underspending on the networks in the past, but we would assume that on the basis of this decision, the catch-up wil have finished by the end of this access arrangement," Mr Rowe told reporters.
"We will not be looking for a repeat of the sort of increase we've seen in this access arrangement in future."
City electricity consumers will also pay more than twice as much to subsidise electricity supplies to the country than previously to $474 million over the next three years.
The state government requires that distribution network tariffs cover the cost of "tariff equalisation contributions" paid as a subsidy to regional power utility Horizon Power. In the first three year access arrangement, the subsidy totalled $213 million.
