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Councils hit with power spike, despite collective deal

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Council electricity costs will blow out by an average of 17 per cent – and as much as 70 per cent in some areas – despite the Local Government Association insisting it secured the “best possible price” in its new supply deal, InDaily can reveal.

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The LGA has signed three new contracts, worth $43 million, with Origin Energy to supply around 150GWh of electricity for the two years from January 1.

One of the three deals, which covers small sites and mainly affects smaller and regional councils, will see the cost of electricity skyrocket by 70 per cent.

LGA President Lorraine Rosenberg said ratepayers “would be personally aware [that] electricity is a major cost pressure and local councils aren’t immune to it”, but insisted the increase represented “a good deal in a bad environment”.

However Rosenberg, who has previously represented the Liberal Party as a state MP, put the onus for addressing the situation on both major parties, saying: “It is further proof that the state and federal governments must continue to focus on reducing power prices for South Australians, and why it’s even more important for decision-making to be kept at a grassroots level at councils, instead of being centralised under the rate-capping regime proposed by the SA Liberal Party.”

LGA CEO Matt Pinnegar said the spike did not necessarily mean the increases would get passed on through rate rises.

“Every council will go through its budgeting process in consultation with its communities before arriving at rate increases, if any,” he said.

“But it does put pressure on council budgets, where in recent rate rises power has already been a significant factor in rate increases, along with cost-shifting and state taxes such as the waste levy.”

Pinnegar, a one-time Labor Government adviser, also attacked the Liberal plan, saying: “It’s another example of the stupidity of a rate-capping policy, which demonstrates a complete lack of understanding of the cost pressures that councils face.”

He said the new energy supply deal was “a better outcome than we anticipated”.

“It suggests that the focus from state and federal governments on energy prices may be having an impact on future forecasts for energy prices [but] the current situation is they’re still high – and too high,” he said.

It follows last year’s power supply deal for participating councils, which saw costs increase by up to 50 per cent on the previous year.

From January, the local government sector will pay an average of 17 per cent more for power over the next two years. But Rosenberg said “by working together as a sector, these contracts will save the sector millions of dollars over the next 24 months in the face of the skyrocketing price of electricity”, striking a balance between “minimising risk in the volatile national electricity market and leaving open options for the expected market changes including the influx of renewable opportunities”.

She said the LGA was working to minimise energy costs through strategic energy audits and “advocating for an Energy Productivity Program for local government” that would see State Government investment in energy efficiency projects.

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