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State Govt seeks private sector ideas to limit power price hikes

The Malinauskas Government is asking for advice from the energy industry about how to protect South Australian households from a forecasted 56 per cent rise in power prices over the next two years.

Jan 17, 2023, updated Jan 17, 2023
Photo: David Mariuz/AAP

Photo: David Mariuz/AAP

The Department for Energy and Mining released an Energy Prices Market Sounding on Monday asking the private sector to “outline its ideas and concepts that will put downward pressure on energy prices”.

The document states that submitted proposals “may be used as a precursor to policy development or a procurement process” and will be assessed on “characteristics that could justify exclusive negotiation”.

“The Department for Energy and Mining is committed to developing solutions to minimising energy price increases for all South Australians, and is calling on industry experts, to contribute to the solution based on experience and know-how through a Market Sounding process,” the document states.

“The Department… views this Market Sounding as an opportunity for participants, including suppliers and parties within the energy industry/field/profession, to contribute information based on their knowledge and experience.

“The opportunity is for the private sector to formally submit proposals of new and innovative ways to minimise energy price increases in South Australia.”

The state government notes forecasts handed down in the federal budget last October that electricity prices could rise 56 per cent in the National Electricity Market (NEM) by the end of the 2024 financial year.

It also notes Federal Treasury expectations that retail gas prices will increase 20 per cent in 2022/23 and a further 20 per cent in 2023/24.

South Australian consumers are already paying among the highest power bills in the nation.

According to research released by consumer choice group Canstar Blue this week, the average quarterly electricity bill for South Australian households is $322.

The December survey, which polled more than 4400 Australian households, found only Tasmania had higher average quarterly prices ($330). Households in Western Australia are paying the lowest average electricity bills ($248), followed by the ACT ($263) and Queensland ($276).

The findings align with an SA Productivity Commission report released in August 2022 which found South Australian retail consumers “continue to face the highest electricity prices across the NEM”.

InDaily asked the office of Energy Minister Tom Koutsantonis what the impetus was for releasing the market sounding this week.

In response, a government spokesperson said: “The Government is naturally fielding a range of suggestions and submissions from various stakeholders. This market sounding is intended to provide a way to streamline such approaches, so that all third-party submissions can be properly assessed within the broader policy response.”

“We have made clear that no option is off the table, and the responses provided to this week’s Market Sounding will help inform the ongoing policy development process.”

Average quarterly electricity prices for Australian households by state. Data: Canstar Blue research/December 2022

InDaily also asked what proposals the state government has to reduce energy costs over the next two years.

The spokesperson highlighted last month’s launch of an Essential Services Commission Inquiry into energy companies that are potentially making “sustained super profits to the financial detriment of South Australian energy consumers”.

He also said the government is “working on a suite of measures to help combat the local impact of rising national power prices” and noted the one-off doubling of the cost-of-living concession for the 2022-23 financial year.

The payment is open to eligible seniors, Centrelink recipients and low-income earners.

“The South Australian Government is actively working on ways to address this national energy crisis, and has created a National Energy Crisis Committee of Cabinet supported by a National Energy Crisis Taskforce,” the spokesperson said.

The deadline for responses to the state government’s energy price market sounding is February 17.

Opposition energy spokesperson Stephen Patterson said: “Labor has been caught out once again with no plan to lower energy prices and now Tom Koutsantonis is relying on [the] private sector for bright ideas.”

“Let’s not forget Tom Koutsantonis delivered South Australian businesses the highest power prices in the nation only a few years ago,” he said.

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