Govt plans subsidy to limit electricty prices

04/04/2008 - 15:33

The state government plans to introduce a $780 million subsidy scheme to limit increase in electricity prices, after rejecting a recommendation to lift prices by about 60 per cent over two years.

Govt plans subsidy to limit electricty prices

The state government plans to introduce a $780 million subsidy scheme to limit increase in electricity prices, after rejecting a recommendation to lift prices by about 60 per cent over two years.

Instead the government will keep electricity prices on hold next financial year but has warned they will rise by 10 per cent the following year.

WA Premier Alan Carpenter said rising fuel prices and the higher cost of renewable energy made the increase inevitable.

Mr Carpenter said the government had rejected an Office of Energy recommendation increasing residential electricity prices by 47 per cent in 2009-10 and 15 per cent the following year.

"This government will not be exposing families and householders to such big increases all at once," he said.

"We will implement a series of staged price increases that will ensure Western Australians have the opportunity to adjust to the increased prices."

As well as the 10 per cent increase in 2009-10, the government foreshadowed more increases in the following years.

"Climate change and the rising cost of generating electricity means prices must increase," the premier said.

The pressures on electricity prices were attributed to higher fuel costs, the need to replace ageing power plants, higher labour costs and the high price of renewable energy.

The government announced it would provide $780 million over three years as a subsidy for electricity consumers.

 

Two statements issued by the Premier are pasted below:

State Government to phase in electricity price increases

The State Government has rejected an Office of Energy recommendation increasing residential electricity prices by 47 per cent in 2009-10 and 15 per cent the following year.

Instead, Premier Alan Carpenter reaffirmed today that domestic electricity charges would remain unchanged for a further 15 months. There would then be a 10 per cent increase in 2009-10, with further annual increases to be phased in over a six to eight-year period.

"The State Government will also provide $780million over three years as a subsidy for electricity consumers." Mr Carpenter said.

The Office of Energy report on electricity prices released today says prices should increase by 47 per cent in 2009-10 and 15 per cent in 2010-11 to match the huge increases in the cost of supplying electricity.

But the Premier said such a move would cause too much pain for ordinary families and households.

"Everybody accepts that prices will rise," he said.

"Climate change and the rising cost of generating electricity means prices must increase.

"However, this Government will not be exposing families and householders to such big increases all at once.

"We will implement a series of staged price increases that will ensure Western Australians have the opportunity to adjust to the increased prices.

"We will also be launching an energy efficiency campaign that will help educate people about reducing energy consumption."

Mr Carpenter said the State Government would provide additional support to the most financially disadvantaged households by introducing a $24.4million package of new measures to tackle 'utility' hardship.

He said the package would include more financial counselling, grants to assist those in genuine financial hardship and energy efficiency initiatives to lower power bills.

Concession holders would also have their energy rebates increased in-line with tariff increases, costing another $23.9million over three years.

The Premier said the $780million subsidy would allow for the shortfall between the cost of providing electricity and the price permitted to charge householders.

"We forecast the first of those payments, in 2009-10, will be $273million," he said.

Except for the introduction of the GST, the 2009-10 tariff increase will be only the second in 17 years.

Significant cost pressures on electricity generation included:

- increased price of fuel, including diesel;

- replacing ageing plant and equipment with more expensive and modern infrastructure; and

- rising labour costs which have increased by more than 47 per cent since residential electricity tariffs increased in 1997-98.

Mr Carpenter said the review had also highlighted climate change issues as having a significant impact on the cost of generating electricity generation.

"Renewable energy is more expensive," he said.

"The review considered the impact of a national emission trading scheme in 2010-11.

"While estimates had been made on the costs of the scheme, the Office of Energy was advising Government that given that the scheme was still in the early stages of development, there was considerable uncertainty around these estimates.

"Tariff increases in subsequent years will need to be determined down the track when we better understand some of the uncertainties, such as future carbon pricing.

"While the Government is keen to help customers as we move to sustainable prices, care must be taken to not undermine the intent of important environmental measures such as emissions trading.

"We clearly have challenges ahead with rising energy costs, but individuals can minimise these costs by taking action to reduce their use."

Public comment is invited on the Office of Energy's report, which can be found at http://www.energy.wa.gov.au

 

 

Impact of household fees and charges again kept below inflation rate

For the eighth consecutive year, the State Government has kept the combined impact of Government fees and charges on Western Australian households to below the rate of inflation.

Premier Alan Carpenter announced today that Government increases in fees and charges for the typical household in 2008-09 would have an overall impact of just 2.4 per cent - well below the 3.4 per cent reference rate of inflation.

"Despite cost and service delivery pressures associated with WA's strong economy and climate change, this Government has been committed to minimising the financial impact on WA families and households," Mr Carpenter said.

"This is demonstrated by the fact that for eight years in a row, we have kept increases in household fees and charges to below the rate of inflation.

"Overall, this year's arrangements will result in the average household paying an extra $85 a year, or about $1.60 a week."

Under the 2008-09 arrangements, the following will apply from July 1;

- no increase in domestic electricity tariffs for the 12th year in a row;

- no increase in compulsory third party insurance premiums;

- no increase in driver's licence fees;

- no change to stamp duty rate on insurance;

- 3.4 per cent increase in motor vehicle licence fees - or $6.64 a year on the average family car;

- 0.7 per cent or $1 increase on the average residential emergency service levy;

- an average six per cent, or $56.30 annual increase on household water bills comprising 3.4 per cent increase in sewerage charges, 5.9 per cent increase in drainage charges and a 9.7 per cent increase in water charges -

Note: These increases are recommended by the Economic Regulation Authority; and

- 3.4 per cent increase in public transport fares. The special 50 cent student fare will remain unchanged, as will all concession fares up to and including two zones, which covers 85 per cent of concession journeys. Other concession fares will rise by a flat 10 cents.

The Premier said WA had among the lowest rates for water, electricity and motor vehicle registrations in the nation.

"We have achieved this during a period when we have also invested billions of dollars in electricity, water and public transport infrastructure," he said.

"The State Government's annual investment on infrastructure in these three crucial areas has almost trebled since 2001.

"In total, we have spent more than $12.3billion on electricity, water and public transport projects in eight years. In the previous eight years, just $5.4billion was spent in these areas.

"We are building our State for the future benefit of all Western Australians."

 

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