[Igor Antunov]

I find this bizarre and exceedingly annoying. I've been around the world, just about everybody pays less for power than we do, many pay almost negligible fees for their power usage. We have virtually unlimited sources of raw energy deposits. Ever since the industry was sold off and privatised, prices have rocketed and there is no end in sight. I sense something very similar with our telcos, a major scam considering that relaying signals through existing lines costs them nothing close to what they're charging us. Their outsourced indian technicians operate from within india and have the ability to diagnose and fix my line here near Sydney from their end. Profiteering out of control? Is that it? Lower costs, raise revenues, at EVERY possible turn?

Fucking ridiculous. Please explain the logic or lack thereof here. I'm putting it down to private profiteering. Vital industries such as energy and telecommunications should never be put in the hands of profit driven enterprise.

[Swagman]

Why is Australian Electricity so expensive?

Chicken little politics..........

[Notorious B.i.G.]

In real terms, electricity isn’t as expensive as it should be. NSW IPART has shown this a number of occasion but is overlook by those looking play partisan politics. Linked/compared to inflation and income electricity prices have fallen (in real terms). Part of this is competition among providers and a lack of awareness by the providers of the consequences of keeping prices artificially low. The consequences include lack of investment in infrastructure. Providers haven’t had the money to invest in updating electricity infrastructure, either in significant upgrading and smooth continues replacement. Now it has becoming old, and needs rapid costly replacement. This cost, instead of being smoothed over the life an electricity user, is being re-couped from users now in noticeable costs increases.
There are others, but that is the major reason for recent costs (last few years) increases.

[Igor Antunov]

So swagman, are you saying lack of government oversight/overall coordination in the industries mentioned? What do you mean by chicken little, I'm not familiar with that crappy story.

And thanks for your input notorious.

[GandalfTheGrey]

Igor, I'd be amazed if Swag's answer didn't relate to the carbon tax.

Chicken little = story about a chicken who screamed about "the sky is falling" - and is usually used as a metaphor for irrational, ill-informed, knee jerk reactions

chicken little politics - in this case is no doubt refers to the government's irrational, ill-informed, knee-jerk reaction to climate change - applying a carbon tax which is solely responsible for a hike in electricity prices - as well as probably bringing about the end of the world as we know it, and ushering in the anti-christ.

[Igor Antunov]

applying a carbon tax which is solely responsible for a hike in electricity prices

Yeah, but this isn't the case, since prices have been hiking for years before the tax was introduced.

[colliric]

Chicken little politics..........

Not more Americanisation of Australian Culture....

It's called Henny Penny here.

Chicken little = story about a chicken who screamed about "the sky is falling" - and is usually used as a metaphor for irrational, ill-informed, knee jerk reactions

Not you too Gandalf!

[Swagman]

I could also add that Aust has a relatively small population spread over vast distances so there are inflated delivery costs.

And.....

Australia has an outdated industrial relations system that artificially inflates the price of labour and contributes to the expensiveness of every god damn thing produced locally.

And......

Australia despite its relatively small population has three tiers of government and consequently three tiers of parasitical public servants gorging on the public purse who create three tiers of petty regulations to justify their existence and manage to push the cost of just about every god damn thing produced locally.

And…..

Yes GTG an irrational, ill-informed, knee jerk reactionary, overtaxing, pork barrelling Government that contributes to the expensiveness of every god damn thing produced locally.

[foxdemon]

In real terms, electricity isn’t as expensive as it should be. NSW IPART has shown this a number of occasion but is overlook by those looking play partisan politics. Linked/compared to inflation and income electricity prices have fallen (in real terms). Part of this is competition among providers and a lack of awareness by the providers of the consequences of keeping prices artificially low. The consequences include lack of investment in infrastructure. Providers haven’t had the money to invest in updating electricity infrastructure, either in significant upgrading and smooth continues replacement. Now it has becoming old, and needs rapid costly replacement. This cost, instead of being smoothed over the life an electricity user, is being re-couped from users now in noticeable costs increases.
There are others, but that is the major reason for recent costs (last few years) increases.

Do you have references for the claims that:

1/ power prices have dropped when adjusted for inflation (say over 20 years)

2/ there is a historical lack of infrastructure that is now being addressed which is causing current bills to rise



Of the later, according to bothtthe government and an independant consulting firm, there has been an over investment in infrastructure in both power and water during the last 7 years.

http://www.theaustralian.com.au/nationa ... 6451287259

Utility spending drags down the rest by: Adam Creighton From: The Australian August 16, 2012 12:00AM

EXCESSIVE investment in infrastructure by power and water utilities has not only stalled their productivity growth, but is dragging down the national economy.
A report by consulting firm McKinsey lends tacit support to Julia Gillard's argument that overinvestment in power generators, regulated by state governments, is pushing up consumer electricity prices.

The report argues Australia's strong income growth will slump unless productivity improves across all industries.

"Utilities stand out for their sluggish performance," the report says.

Cyclical investment in upgrades "that are yet to yield benefits", such as underground cabling, are undermining national productivity.

Utilities have increased the value of their capital stock by about 37 per cent since 2005, while labour productivity growth has fallen to around zero.

[Capitalist]

I work in the power industry in Queensland and have some background as to why prices are high there. A few years ago the Queensland Government decided that the power generation companies could only be generators while the retail companies could only be retailers, why they decided on this is not certain. However, two of the retailers, AGL and Origin, were allowed to build gas turbine generators with the intention that they would be used at peak demand times. AGL and Origin are also involved in the production of Natural Gas and when the price of natural gas dropped a few years ago they began using the gas turbine generators not only to compensate for the lower overseas demand of Natural Gas but to limit wholesale prices. While this was good for AGL and and Origin this was not good for the power generating companies, resulting in the companies losing money and becoming financially vulnerable. Since the majority of the power generating companies are owned by the Queensland Government they've effectively screwed themselves by separating the power generators and retailers and allowing AGL and Origin to build generators. The result is that none of the major power companies are in a financial position to build new power plants. At the same time a large portion of their generating assets are ageing so that when there is a breakdown it can be more profitable for them to keep the generator offline as this decreases the available electrical power and raises the wholesale prices. Once the price of Natural Gas rises again to the point where exporting is much more profitable AGL and Origin will lower their electrical production; combine this with the ageing generator infrastructure and this will result in prices rising further.

But the main factor of prices rising further in recent years has been the "gilding" of the transmission network, which began a few years ago because the governments of the time believed that the network needed to be secured. The Carbon Tax has yet to have a significant effect on prices but it has made the power generators more financially vulnerable since they don't make a profit until wholesale prices are around $45 per Megawatt Hour or higher whereas in the past they would be making a profit at around $15 per Megawatt Hour or higher.

[Igor Antunov]

Thanks for your input.

[Social_Critic]

Igor, as we can see the energy business does tend to be very complex and it's impacted by government policy as well as technology and market developments. My property in Texas has very low electricity costs because they allow companies to enter the generation market, and others to enter the retail market as well. Power generation is gas fired, nuclear and wind. Because the boom in shale gas dropped gas prices electricity generation using gas costs less. The system is highly competitive. What I don't like is the rickety nature of distribution which leads to extensive power cuts when we have wind or ice storms.

I also have property in Europe, and I find the European system here to be quite stupid. They overbuilt cockamamie solar power, have really shitty gas contracting strategies which make natural gas cost triple what it costs in North America and have the same bullshit hysteria with carbon taxes and so on.

I think the best solution for a country is to have a very top notch agency for power system dynamic modeling and use computer models to understand the consequences of government actions. Most governments are in the Stone Age in this respect.