Courier Mail hails high fixed network charges, to stop rich subsiding poor | RenewEconomy

Courier Mail hails high fixed network charges, to stop rich subsiding poor

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Op-ed in Murdoch-owned Brisbane newspaper argues fixed network electricity fees “fairest system” for billing households. Not by a long shot.

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Sometimes when you read stuff, you have to stop and blink and ask yourself, did I really just read that?

This opinion piece from the Courier Mail, the Murdoch-owned monopoly daily in the state of Queensland is a case in point. It’s in praise of high fixed electricity network charges, and it says that it is about time that rich households that use lots of electricity stop subsidising modest energy users and pensioners.

Yes, that’s what it says. It identifies a problem, and then shoots the wrong people.

As RenewEconomy has pointed out, the latest round of big spikes in fixed charges means that low energy consumers – pensioners in particular – are copping a massive lift in electricity bills, even as the bills for big energy users fall. They are being charged, the Courier Mail recognises, $477 a year before they even switch on a light.

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For those using just 1MWh a year, the bill has doubled and they – the people who can least afford it, or those who have invested in solar and energy efficient appliances – are now paying the equivalent of 72c/kWh.

This is good, says state political roundsman Steven Wardill in his opinion piece, despite the fact that he recognises that the state has spent way too much on the networks, the poles and wires.

“They (the networks) either failed to forecast the improved efficiency of households and the slowdown in population growth, or they greedily expanded, knowing they get a guaranteed return on every dollar they spend. The truth is probably a bit of both,” he writes.

So who should pay for this? Most people would think it is not OK to pass on unjustified costs to consumers, but pricing regulators don’t seem too concerned. Wardill says that the big energy users who were used as justification for this over-investment should certainly not be held to account. He says high fixed charges are good because they prevent “big households subsidising the small.”

High fixed fees on power bills is “actually the fairest system of them all,” he says.

Actually, it’s not – and not by a long shot. The fairest systems are those that are truly cost reflective; those which base their charges on the cost of the network at the time of network peaks.

And the people who shouldering those bills are most likely those high-consuming households who switch on all their appliances in the late afternoon and evening.

There are ways of addressing that demand without loading fixed and unavoidable charges on people who can’t afford to pay for high energy use, or who are doing the right thing, such as making their homes more energy efficient.

And if, as Wardill rightly points out, there has been too much investment in the grid, then why should the consumer be saddled with the costs?

Wardill’s recommendations are a recipe for the very “death spiral” that many analysts – and some utilities – have forecast could occur. You keep on jacking up the price, people will find cheaper alternatives, and leaving the grid might be one of them. That would then have real social equity issues.

The question is where is this thinking coming from? Queensland has been keen to lease its networks, but not under the Labor government, although it is probably keen to protect their value, and their revenues.

The networks were fine with low fixed charges, as long as consumption increased all the time. That was a subsidy from the poor to the rich, and those who didn’t want a part of it, and were able to save themselves money by being efficient or having solar. Now that the tables have turned, the vested interests want to change the rules of the game, and to make sure that the pesky poor don’t duck their obligation to subsidise high energy users.

The state is also launching two inquiries – one from an expert panel into the 50 per cent renewable energy target, and one into the million solar rooftops target, which will mean less power being drawn from the grid by consumers.



The state’s new energy minister, Mark Bailey, is also looking at reforming the system.

Is this a shot across the bow from the new Productivity Commission set up to investigate the “fair price of solar”, or is it a parting shot from the Queensland Competition Authority’s Malcolm Roberts, who has slashed the price of solar and came up with some pretty wild proposals; or from the new head of the energy department, Paul Simshauser, the former AGL economist who was a fierce opponent of feed-in tariffs?

Either way, it is just a small example of the forces at play over the network and broader electricity industry, as it faces a revolution in the way energy is produced and delivered.

Most likely it is part of the misinformation campaign that is being fed into the market – mostly to seek to protect the vested interests of the big network operators. There is massive resistance from the network lobby group, particularly to the idea they should be held to account for the massive over-spending on poles and wires.

They have even suggested a compulsory charge on all consumers, whether they are connected to the grid or not, to protect their long-term revenues. Alternatively, they suggest changing the depreciation rules that will allow them to load up costs over the short-term, to try to get their money back before their networks become redundant.

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8 Comments
  1. Ana Milosevic 5 years ago

    Mr Murdoch may just request his ‘government’ to euthanize pensioners and modest users of COALition generated energy….. Not enough PROFITS for the big guys?????

  2. Peter Campbell 5 years ago

    While we are at it, let’s increase the access charge for the roads. Consider how analogous this is:
    Let’s remove all taxes on petrol but make the cost of registering a motor vehicle several thousand dollars. That way, the little old lady who just wants to know she can access the road system will pay her fair share for the privilege when she drives her small, fuel-efficient car to the local shops once a week. Her cost will be almost the same as the person who drives a tank all day every day – a hero who is currently subsidising the sponging little old lady.
    As things stand now, people pay in proportion to how much they use the road. Drive a lot, choose a heavy inefficient vehicle, pollute a lot, wear the road out a lot and you pay lots; drive a little, pollute only a little, add hardly any wear and tear and you don’t pay much. How can that be fair?
    Then there are people who still want to use a car on the road every now and then but cycle most of the time. They save money, don’t pollute, don’t wear out the roads and don’t take that hard-to-find parking spot, but they too are actually selfish people sponging off the rest of us by avoiding paying for the roads via the taxes built into fuel costs. So, let’s penalise cyclists by charging them an extra network access fee on top of the one they have for their car.
    You know it makes sense!

    • Adhraf Ahassan 5 years ago

      The highway system was build with federal funds 60 years ago and it was designed solely for the military. It was paid for with inflation and the military should pay for maintenance of the roads.

  3. Chris Fraser 5 years ago

    I’m not from there, but I’m in a state of confusion. Socialising the high cost of network investment firstly appeared to be the complete antithesis of liberal values. And certainly not something – how would you describe it – a ‘supportive’ journal would say.
    I’m glad I got the information from RE because I wouldn’t want to lose 50c to get it from the source. But what’s that ? People pay $1.40 ?

  4. Ian 5 years ago

    Clever move by the networks to increase fixed charges and reduce or maintain per KWH charges. All designed to stop solar in its tracks. You have to hand it to the networks for that one, knight takes rook and check. Coal one, domestic solar zero.

    However, they forgot the little pawns in this move, and that may be their undoing. No one appreciates such Scrooge-like behaviour towards the weak and powerless, elderly and poor , 72c/KWH: shame on you, network operator, deplorable of you utility. Profits over people. None will shed a tear when coal finally has its Kodak moment.

  5. lin 5 years ago

    So Murdoch is in favour of having widowed pensioners, single occupant residences,the poor, and low energy use households subsidising the energy guzzling rich? Nice. We built the majority of the grid and generation infrastructure through taxes. Now we get to pay all over again through outrageous fixed charges, just so utilities can continue to grow their profits. This looks like another election losing idea.

  6. john 5 years ago

    The idea of putting up network connection costs is designed to make those who spent money getting PV pay more.
    The attitude is that those who are not using much energy well they are just collateral damage.
    Society now is not about looking after everyone, it is all about me, so those who can mitigate their usage will, those who can not; well sorry I am not interested.
    Poor policy decisions like these will result in a break down in community cohesiveness
    Welcome to the new way society is moving not nice but that is how it is.

  7. George Michaelson 5 years ago

    I want to repeat a question here I asked in another column: If the NPV of the feed in tariff is not sustainable, then why don’t the industry players buy out the 44c owners?

    The goal was to pay for the PV across its lifetime. If that can be shortened, and the PV remains as a source of power, then buy out the 44c payback, write off the cost, and move on.

    There is a tried and tested model of compensating people when you have to alienate their contract rights, land rights, income rights.

    But no. Instead, we’re going mad on community wide cost recovery and pricing model changes.

    Why is this?

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