Western Power backs forecast tariff hikes

Government utility Western Power has defended large forecast hikes to discontinued tariffs still applied to some business customers, as it continues moves to reform its product offering.

The state-owned utility raised eyebrows earlier this week when its revised tariff change forecast pitched significant hikes to the RT4 and RT16 tariff services in the coming years.

The RT4 time of use tariff applies to the electricity use of some business customers during on-peak hours between 8am and 10pm on weekdays.

The utility has forecast a 14.59 per cent tariff increase in 2023-24, followed by a 10.54 per cent increase the following year, then hikes of 20.82 per cent and 20.97 per cent in the years that followed.

A similar scale of hike was forecast for the RT16 tariff, another time of use tariff applying to some business customers who both import and export energy from the grid.

The forecast hikes have been submitted to the Economic Regulation Authority for approval.

A Western Power spokesperson told Business News the RT4 and RT16 tariffs were two of 10 being gradually phased out.

“The proposed network tariff price list contains ten discontinued time of use tariffs for residential and business, including RT4 and RT16 tarrifs,” it said.

“These tariffs were discontinued in 2019 and are in the process of being phased out.

“Existing newer tariffs represent a more efficient use of the network and lead to lower network cost increases in the long term.”

Despite the phase out, Western Power confirmed that some customers were still currently paying for the RT4 tariff.

“While Western Power does not assign customers to individual network tariffs, we are aware that there are less than 1,900 customers remaining on the RT4 and less than 250 on the RT16 tariffs,” the spokesperson said.

“Customers currently assigned to the discontinued time of use tariffs may be transitioned to new tariffs, however this will be determined by their energy retailer.”

Western Power said the proposed weighted average price increase for the 10 discontinued time of use tariffs came in at between 7.4 per cent and 12.9 per cent next financial year.

Time of use tariffs are applied to energy consumption at peak times on the grid and offer more flexibility of pricing than single rate tariffs.

The tariffs are designed to incentivise off-peak power use and have been usurped by new tariff offerings which encourage Western Power customers to shift customers to consume energy in the middle of the day.

More modest increases were forecast for the newer tariffs.

The ERA will make a determination on the proposed network tariff price list, to be published on May 14. An approved price list will come into effect on July 1.