The Hodgman Government welcomes today’s release of the Australian Energy Regulator’s determination on TasNetwork charges.
The Regulator’s decision means a reduction in the transmission charge that is passed on to Tasmanian households and small businesses as part of general power bills. The saving is roughly $110 on the average household power bill.
This is good news and it shows the focus on cost efficiency is having an impact. However, there continue to be serious challenges on the horizon due to the current upheaval in the national electricity market.
While today’s announcement shows that network charges may be reducing, wholesale costs, which are influenced by the national market, continue to be a significant concern.
Wholesale energy costs are a major component of the average household and small business power bill.
Unfortunately, when in Government, Labor and the Greens changed the way power prices in Tasmania are set. Under the Labor-Green model, Tasmanian power prices are hard-wired into the mainland power price and even though we aren’t reliant on mainland power generation, Tasmanian prices reflect the mainland price for wholesale power.
Effectively, under the Labor-Green model when it comes to power prices, if the mainland sneezes, Tasmania catches a cold.
Under the regulated model, households and most small businesses are protected from price volatility during the year, however they are exposed to price changes as prices are reset from 1 July each year.
Following the energy crisis in South Australia, other issues with the energy grid in New South Wales and the closure of the coal-fired Hazelwood power plant in Victoria, wholesale energy prices remain highly volatile in the national market. As a consequence of this upheaval in the national market, without further action from the Government, regulated power prices in Tasmania will be forced up significantly from 1 July.
This would not be an acceptable outcome from the Government's perspective.
That's why we are working with our energy businesses to make sure that Tasmanians aren’t exposed to the issues affecting the national market and we will have more to say shortly on the steps we are taking to protect households and businesses from the extreme volatility that other mainland states are now facing.