21/12/2007 - 14:57

State invites comment on electricity market reform

21/12/2007 - 14:57

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The state government has called for submissions on an issues paper released today as part of a review of electricity prices for all residential, community and business customers.

State invites comment on electricity market reform

The state government has called for submissions on an issues paper released today as part of a review of electricity prices for all residential, community and business customers.

The 'Electricity Retail Market Review' review involves a study of electricity retail tariff arrangements, the introduction of full retail contestability (which provides all consumers their choice of electricity retailer), and the roll-out of smart meters.

According to the issues paper, residential tariffs have not increased since 1997-98 (with the exception of the introduction of the GST in 2000-01), and small business tariffs have not changed since 1991-92, despite significant increases to the cost of producing and supplying energy in recent years.

Coordinator of energy Jason Banks said its aim was to ensure that tariffs reflected the real cost of producing and supplying electricity and were at levels that were sustainable into the future, appropriately balancing the interests of the environment, the economy and consumers.

The review will also examine the ability of alternative tariff structures to influence desirable customer behaviours such as energy conservation, he said.

A cost-benefit analysis of the implementation of full retail contestability will also be conducted as part of the review.

This will include an assessment of the arrangements needed to implement full retail contestability, such as appropriate legislation, market rules, a market operator, IT systems and customer protection measures.

The review will also involve a cost-benefit analysis of the introduction of smart meters to facilitate the introduction of time-of-use pricing so that customers can better manage their use of electricity during peak periods.

"We have engaged a consultant to undertake detailed economic modelling to assist with the review. This economic modelling will be completed in February and will inform government on the magnitude of the required increases in tariffs," added Mr Banks.

The next round of public consultation will involve consultation on a draft recommendations paper to be released for a four week consultation period in February 2008.

The Office of Energy will complete the review and prepare a report with its recommendations for minister Francis Logan's consideration in March 2008.

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