Electricity reforms a step in the right direction: CCIQ

Thursday 8 September, 2011 | Tags: Energy Environment and Sustainability

Chamber of Commerce & Industry Queensland (CCIQ) has welcomed passage of the Queensland Government’s reforms to improve electricity pricing, passing with bipartisan support in Parliament on Wednesday night.

In CCIQ’s Energy Blueprint, released earlier in August, it was shown that electricity price rises delivered in Queensland over the past five years are unsustainable and cannot continue into the future if Queensland wants to maintain low unemployment, strong economic growth and high community prosperity.

CCIQ General Manager, Mr Nick Behrens said the pricing methodology the Queensland Government had in place was not a flexible enough instrument to ensure competitive prices into the future.

 
“There was considerable merit in shifting to a Network plus Retail approach and the challenge is now to ensure the devil of the detail is right.”
 
To this end under the new pricing methodology framework CCIQ supports:
 
A reduction in the allowed rate of return and/or the inclusion of a retail margin discount factor that reflects average state profitability levels and also reflects a service and efficiency performance measure.
The introduction of productivity, expenditure and service benchmarking as part of the regulatory methodology to force improvements across the generation, distribution and retail sectors.
A 3 year forward price determination approach. In the absence of a multi-year pricing determination, CCIQ strongly encourages the Government to ensure annual pricing reviews and determinations are completed at least six months in advance the next pricing period (i.e. no later than December each year)
CCIQ additionally supports the shift to an inclining block tariff for regulated retail tariffs, provided there is full cost reflectivity across each of the inclination points and that the tariff structure and associated pricing methodology does not allow for cross subsidisation of low-energy users by higher energy users.
The Queensland Government should provide resources and support services, to small and medium sized businesses to assist them with understanding the new electricity pricing structures and investigate market contract options.
Finally Queensland businesses should be provided incentives to support a shift to time of-use tariffs and cost subsidisation for the installation of appropriate interval meters. The Queensland Government should also explore the supporting policy and regulatory framework to encourage greater energy efficiency and peak demand management outcomes afforded through time-of-use tariff.
Founded in 1868, the Chamber of Commerce & Industry Queensland is the peak association for the state’s employers across every industry. It provides support, advice, training and advocacy for more than 25,000 businesses. 

“We considered that the BCRI methodology had failed to provide the State’s businesses with a reasonable level of price predictability and certainty,” he said.

“Given that this outcome is a critical one for the business community, CCIQ believes that a fundamental overhaul of the price setting approach was warranted.

“There was considerable merit in shifting to a Network plus Retail approach and the challenge is now to ensure the devil of the detail is right.”

To this end under the new pricing methodology framework CCIQ supports:

  • A reduction in the allowed rate of return and/or the inclusion of a retail margin discount factor that reflects average state profitability levels and also reflects a service and efficiency performance measure.
  • The introduction of productivity, expenditure and service benchmarking as part of the regulatory methodology to force improvements across the generation, distribution and retail sectors.
  • A 3 year forward price determination approach. In the absence of a multi-year pricing determination, CCIQ strongly encourages the Government to ensure annual pricing reviews and determinations are completed at least six months in advance the next pricing period (i.e. no later than December each year)
  • CCIQ additionally supports the shift to an inclining block tariff for regulated retail tariffs, provided there is full cost reflectivity across each of the inclination points and that the tariff structure and associated pricing methodology does not allow for cross subsidisation of low-energy users by higher energy users.
  • The Queensland Government should provide resources and support services, to small and medium sized businesses to assist them with understanding the new electricity pricing structures and investigate market contract options.
  • Finally Queensland businesses should be provided incentives to support a shift to time of-use tariffs and cost subsidisation for the installation of appropriate interval meters. The Queensland Government should also explore the supporting policy and regulatory framework to encourage greater energy efficiency and peak demand management outcomes afforded through time-of-use tariff.

Founded in 1868, the Chamber of Commerce & Industry Queensland is the peak association for the state’s employers across every industry. It provides support, advice, training and advocacy for more than 25,000 businesses.