Inquiry: Electricity price rises due to network gold-plating

THE massive 70% rises in the cost of electricity in the past five years came down to spiralling network costs and flaws in government regulation, a Productivity Commission inquiry has found.

A report released by the commission on Wednesday found the regulatory flaws, industry inefficiencies and the network costs - largely "gold-plating" of the network - were the chief drivers of the price increases.

While the report debunks any myth that the carbon tax was the chief driver of the surge in the cost of power bills, it also confirms more work needs to be done to address the complex problems.

"These flaws require a fundamental nationally and consumer-focused package of reforms that removes the interlinked regulatory barriers to the efficiency of electricity networks," the report reads.

But the commission also reported a series of reforms made late last year had "only partly addressed these flaws".

"Resolving benchmarking and interconnector problems will be a worthwhile addition to these recent reforms," it reads.

"But there remains a need for further significant policy changes to make a substantive difference to future electricity network prices, and to produce better outcomes for consumers - the latter being the primary objective of the regulatory arrangements."

The government response to the report accepted some of the recommendations, but not all, with the response largely being that reforms to the energy market would continue.



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