Australia PM calls for electricity reform

Aug. 7, 2012 at 11:33 AM
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SYDNEY, Aug. 7 (UPI) -- Australian Prime Minister Julia Gillard has called for an overhaul of Australia's electricity supply market.

"Power bills have become the new petrol prices: not just an essential of life that always seems to be going up, but a vital commodity, where what we consume each day, or pay every quarter, seems beyond our control," Gillard said in a speech Tuesday to the Energy Policy Institute in Sydney.

Gillard urged Australian states to reform energy markets, saying electricity prices cannot continue to rise at the levels they have over the past four years.

Gillard said that, under the current environment, there were regulatory incentives for energy suppliers to over-invest in infrastructure and to pass on the costs to consumers. Publicly owned electricity suppliers, she said, have seen a 50 percent revenue rise over the previous five-year period, with privately owned suppliers experiencing a 30 percent revenue increase.

Gillard says half the extra cost in power bills is due to network charges.

"People are paying more for the so-called poles and wires -- not to produce electricity but just to move it around the system," she said. "In other words, revenue to the states went up nearly twice as fast as revenue to the private network operators."

"This has hit consumers hard," she said, noting that a typical household in New South Wales is paying more than $1,000 for power each year compared to four years ago.

Conservative opposition leader Tony Abbott pointed to Australia's carbon tax, which took effect July 1, as the reason for rising electricity costs.

"Julia Gillard's carbon tax is responsible for at least half of the current increase in household power bills and the tax will simply go up and up and up every year," Abbott said, the Herald Sun newspaper in Melbourne reports.

Under the scheme that went into effect July 1, businesses that emit 25,000 tons of carbon dioxide or the equivalent in other greenhouse gases will be charged $24 per ton.

Gillard had made an about-face on the issue after she had said in her 2010 election victory that there would be no carbon tax under her administration.

Gillard defended the carbon tax in Tuesday's speech, saying that excluding the carbon price, the average electricity bill went up by at least 48 percent in the last four years.

While Gillard says that low- and middle-income earners receive compensation from the federal government for the impact of the carbon tax, they don't receive anything to help them cope with electricity increases driven by state factors.

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