Profiteering after privatising is what made our electricity prices the one of highest in the world.
Let no one tell you that the increase is due to the carbon tax or renewable targets, that is only $4 of your electricity bill.
51 per cent of each household bill is spent on network costs, and network companies have spent $45 billion on updating our poles and wires over the last five years.
This investment was justified by the network companies’ own data, which showed that Australia’s energy demand was going to increase dramatically.
But in 2009, energy demand in Australia didn’t go up—it went down and is still going down.
Despite the clear reality of falling demand, the network companies insisted that demand was rising, and they carried on investing billions of dollars into the grid. Every dollar of that investment is now being recovered from consumers, via our power bills.
Every dollar, plus ten per cent—a guaranteed return granted to them by the regulator. This is what causes the damage.
In 2012, a Senate inquiry into electricity prices said: ‘What we found was those network businesses—that earned the most profits were the ones that invested the most. So there was a perverse incentive in the system for an over-investment in the poles and wires, and that led to dramatic profits for those businesses, but of course it was the consumer that paid for that cost of that additional capital.’
They knew they did not need the poles but were making 10% profit for the investment that they knew we were going to have to pay for because it was guaranteed that they could charge us for it when the electricity assets were sold to them.
Have a nice day 🙂