Carbon tax savings eclipsed as Vic fixed power price soars 50%

Electricity prices in Victoria have bounced back to where they were just over six months ago, with a new report finding that most households are now paying as much for power and gas as they were when the price on carbon was in place.

The report, released by St Vincent de Paul on Friday, finds that while wholesale energy prices dipped after Tony Abbott’s successful repeal of the carbon tax in July 2014, fixed price increases introduced in January by all three of the incumbent retailers – AGL, Origin and Energy Australia – meant any savings on power had now been eclipsed.

The findings reflect badly on an increasingly unpopular Abbott government, whose main justification for axing the carbon price had been to bring financial relief to Australian households via reduced electricity bills.

But this claim never held much water with industry experts and analysts, like RepuTex and Bloomberg New Energy Finance, who warned that repealing the carbon price could actually have the opposite effect, driving up retail power prices for consumers.

As St Vincent de Paul spokesman Gavin Dufty has noted, Victorian power companies are trying to cover their own fixed costs, while also compensating for lower usage by consumers.

In some cases, the report found, Victorian households were paying up to $1,000 a year for gas and electricity before having switched a single light or appliance on, making household efforts at energy efficiency seem virtually redundant.

“Over the past five years, the fixed charges for electricity have more than doubled and the fixed charge for gas has gone up over 60 per cent,” said Dufty, adding that one fixed tariff had been noted at $2 per day for electricity.

And the price-spread – the difference between the best and the worst market offers – meant that households with typical electricity consumption (4800kWh) could save up to $500-$800 per annum,  depending on their network area) if they switched to the best market offer.

Dufty told the ABC in an interview that the challenge for consumers was to look at the fixed charge component of bill when they were shopping around.

“They do make a difference. On average you’re looking at about $700 a year fixed before you consume anything,” he said.