Consumer groups call for reduced network charges as regulator reviews rates of return

Consumer, small business and social sector groups are calling for a rethink of rates being paid by energy users to cover the costs of network infrastructure.

The collective of organisations is urging the Australian Energy Regulator (AER) to reduce the Rate of Return Instrument, used to calculate how much consumers pay network operators for their investments in poles, wires and substations. 

In a letter to the regulator made public on Monday, they argue that while investment in energy networks is crucial, costs should be recovered at the lowest level necessary.

Brendan French, chief executive of Energy Consumers Australia which is among the groups calling for change, said a billion dollars of consumers’ money was being poured down the energy network drain. 

“That’s money that can and should be back in Australians’ pockets for other essentials,” he said.

“The AER needs to put consumers first and not let energy networks needlessly profit from this complex regulatory process.”

The regulator is reviewing the Rate of Return Instrument and has been accepting submissions, with a final decision due in December.

Mr French said while a draft proposal by the regulator addressed some of the billion-dollar premium, it doesn’t go far enough.

“Our joint letter to the AER makes a simple request – maximise every cent possible back to households and small businesses facing cost-of-living pressures,” he said.

Australian Council of Social Service chief executive Cassandra Goldie said energy networks were continuing to make significant profits at a time when some people were struggling to heat their homes in winter, keep cool in summer and put food on the table.

“The AER’s proposed changes, while welcome, do not go far enough given the significant impacts electricity prices are having on inflation and cost-of-living,” she said. 

“The AER must implement further measures to reduce unnecessary network profits. 

“Its job is not to strike a ‘balanced outcome’ between energy networks and consumers. Its job is to put people first.”

AAP

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