Victorian electricity and gas bills soar

May 29, 2015

Exorbitant gas and electricity bills are threatening Victorian living standards.

The Essential Services Commission (ESC) of Victoria reported that more than 34,000 households were disconnected from essential utilities in 2013/14.

The residential electricity disconnection rate increased this year to 1.47 disconnections per 100 customers, a 36% increase on the 1.07 disconnections in 2012/13.

The ESC also reported an increase in the gas disconnection rate to 1.33 disconnections per 100 customers, a 42% increase on the rate in 2012/13.

The Australian Bureau of Statistics (ABS) reported that from 2007 to 2012 the cost of electricity, gas and other household fuels has grown steeply nationwide. The most significant increase in the retail energy price was in Melbourne, where it rose 84%.

Gavin Duffy, manager for policy and research at the St Vincent de Paul Society, told Green Left Weekly that 20% more people have applied to them for assistance to pay electricity and gas debts in the past three years.

“It is devastating, particularly on really cold or hot days. Some [people] do not have cooling facilities and it can lead to death,” said Duffy.

Some low-income households are now forced to carefully plan their budgets and forgo food or even their children’s needs to pay their bills.

Duffy said: “The federal government has a role to make sure social security … payments are adequate enough to meet basic needs … The electricity price has gone up over the last five years, [but] pensions and benefits have not kept up.”

The electricity companies have increased supply based on expectations that there would be a rise in the demand for power. However, between 2009/10 and 2013/14, annual electricity consumption fell by 1%.

The fixed component of people's electricity bills makes up 26% of the total retail price, derailing households’ attempts to reduce power usage. As consumption of electricity has decreased, the fixed component has increased.

Duffy advocates price regulation as a solution. He said that government ownership doesn't necessarily work better and “standards are still required”.

“Whether it is government or privately-owned, there should be a strong regulatory framework and a concession framework.” he said.

In 2009, electricity retail prices in Victoria were deregulated and prices are now set by retailers in the market.

In 2009/10, ABS reported that 13% of households were under financial stress and about one in 10 could not pay their electricity and gas bills on time.

Solar panels and efficient devices allow high-income households to reduce power costs, while low-income families are subject to high costs.

Socialist Alliance spokesperson Sue Bolton told GLW that the privatisation of electricity in Victoria in the 1990s is the reason for Victorian electricity prices being among the highest in Australia.

Bolton disputed the assertion that it does not matter whether the industry is publicly or privately-owned. While it is true that government ownership does not automatically mean lower prices, there is more of an opportunity to cut the cost of electricity and switch to renewable energy if it is in government hands.

“Regulation isn't sufficient to prevent energy companies from ripping off consumers, especially people on low incomes. Energy companies go door-to-door selling dodgy deals, they have been increasing the fixed price to maintain their profits as demand decreases and they have cut the amount of maintenance that they do on the power lines,” Bolton said.

“While the energy industry is in private hands, the companies will always be in the hunt to make more profits. We need to take the electricity and gas industries into public hands, with community input into how a publicly owned energy system would work.”

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