Power Price Soars

Newcastle Herald

Thursday March 6, 2008

By IAN KIRKWOOD

BUSINESSES on market-based electricity contracts are facing power price rises of 50 per cent or more, which industry experts say will soon flow to household users.

Newcastle City Council's energy and resource manager Peter Dormand says the council's electricity costs are likely to rise by about 45 per cent when its existing long-term contracts run out next year.

Its bill would go from less than $900,000 to about $1.3 million, a rise of about 45 per cent. Without the power-saving measures begun in 1995, the council's power bill would now be about $1.6 million a year, and heading to $2.4 million under the expected new prices.

Mr Dormand said the higher power prices went, the more sense it made to invest in energy-saving technology.

The council had spent $2 million but saved $4.5 million in the process, he said.

Power consultant Gary Counsel of GJME Energy Management Solutions said it had gone from being a buyers' market to a sellers' market,

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Consumer shock ahead as price soars

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with EnergyAustralia, Country Energy and other power retailers telling companies to "take it or leave it" when they put offers on the table.

EnergyAustralia and Country Energy agree that contract retail power prices have risen, saying the drought has forced up the price of the wholesale electricity they compete to buy from generators.

The power companies say that household and small business customers who opt to stay on standard, regulated power pricing have not been affected by the increases.

The State Government is promising price capping as part of its power privatisation plan, but national steps to remove all price caps for electricity are well under way. (See accompanying report.)

Belmont 16 Foot Sailing Club manager Gordon Maxwell said the club changed electricity retailers last year when its existing supplier virtually doubled the cost of its power.

"We switched and the cost has gone up by about 30 per cent but the alternative was impossible," Mr Maxwell said.

"Our power bill is about $30,000 a month and the sort of price increases that are being sought could be enough to sink a small struggling club."

Newcastle Airport is another business forced to pay "substantially more" than it had expected, despite three retailers competing for its business.

"Competition might lead to falling prices in the short term but in the longer term they tend to even out," airport spokesman Brad Spence said.

A spokesman for EnergyAustralia said the average wholesale price of power had doubled from $31.05 a megawatt hour in 2006 to $62.07 last year.

"Agreements being offered to commercial and industrial customers have therefore generally increased," the spokesman said.

A spokeswoman for Country Energy said the drought had "triggered extreme volatility" in wholesale prices, leaving retailers with "really no choice but to increase retail prices".

"Household and small business customers, who have taken the regulated electricity price option, have not been affected by the market increases."

© 2008 Newcastle Herald

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