2 May 2018
The banking royal commission in Canberra has laid bare the finance sector’s litany of misdeeds, with reports of mismanagement, unscrupulous, insidious and sometimes illegal practices. In the wake of damaging revelations during the banking royal commission, it is only a matter of time before the calls for greater transparency and accountability of the energy sector are acted on.
The Winners and Losers of the Monopoly Game report commissioned by QFF industry member CANEGROWERS examining the profitability of the electricity networks revealed similar unconscionable conduct and rorting.
The report demonstrates that the Queensland networks’ prices are over twice the efficient level, making them extraordinarily profitable and achieving 3-4 times the annual profit margins of comparable energy companies. These networks are realising long-term returns (return on equity) 10 times more than the National Australia Bank’s returns!
For every dollar that Queensland energy consumers paid for network charges over the past three years, the Queensland Government collected 47 cents in profits. Despite those extraordinary returns, successive Queensland Governments have consistently extracted more profits from the networks than they create.
Despite Queensland’s transmission and distribution networks being 100% government-owned with no private competition, the Queensland Government charges them competitive neutrality fees to ensure they do not have a competitive advantage which are then passed onto the consumer. And the excessive Regulated Asset Bases continue to drive the networks’ prices, which are now the highest of any network in any region or country in the world.
This ongoing ‘energy crisis’ continues to have viability and profitability ramifications for Queensland farmers. In addition to price increases for some of more than 200% in 10 years (compared to 24% inflation), tariffs specifically designed to meet the needs of irrigation and specific farming activities will be phased out by 30 June 2020.
Governments should treat electricity as the basic, fundamental need it is – not as a cash cow at the expense of our sector’s international competitiveness.
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