Relatively stable – but out of control – added costs

Your real energy costs are the networks. Interesting statement and arguably true. But is more gaming going on than meets the eye? The October 2014 energy bill arrives, and despite having negotiated a better energy price for your Victorian based small to medium sized business, you see you are paying more. Why you ask? You have a new energy price, no carbon price added, do not have solar, have reduced your load through energy efficiency measures as was encouraged and expected to be better off. The concerned business sent us their bill for analysis and what stood out.

From the Energy Retailer:

The unit price of energy had = reduced 33% – good.

The Retailers ‘other charges’ introduced new fees = increase 18% – bad

The Retailers LRET liability passed to you = increase 69% – bad

Therefore after paying a lower energy price and the Retailer contract exchanged, you find increased fees and passed to you their liability for the shortfall in their obligation on environmental charges.

From the government:

Relatively stable on state government imposts = good.

Therefore there are no new imposts from government – yet.

From the Networks:

Peak consumption charges = up 16% – bad

Off Peak consumption charges = up 7% – bad

The net effect on their total billing from the changes about 14% increases and that you can clearly see it is higher than inflation estimates. When you consider the business did expect a net reduction of 13% – it is another price shock they did not see coming – so much for cheaper electricity!

From an environmental perspective the good thing is the business reduced their carbon footprint about 8% through state government offered energy efficiency measures. At least they can have a conscience vote to please!

As has been said previously, the energy industry is the only industry in Australia that can avoid the contract terms as it suits. What is not helpful is the AER Determinations of late that introduce ‘may do’ As opposed to ‘must do’ in their wordings of onus for the industry. You could say there is a lot of water in that soup!