A new report exposes Australian electricity networks’ supernormal profits of $11B, on top of ‘normal’ profits of $16B since 2014. In 2022 alone, the super profit represented between $80 and $400 annually per customer. What’s the scam?
The scam is the electricity networks benefitting from failures in the regulatory system. Failures that allow for near-monopoly behaviour to inflate consumers’ power bills amid a cost-of-living crisis.
The Institute for Energy Economics and Financial Analysis (IEEFA) estimates that the electricity networks extracted $2 billion of supernormal profits in FY 2022, making total profits “2.5 times the reasonable levels necessary to compensate shareholders for risk.”
Most of the electricity companies benefit, while consumers suffer, with price increases of 20 – 25 per cent in the eastern states over the last 12 months. The notable exception is Western Australia, which has its own regulatory regime that leaves consumers there much better off, with only around a 2.5 per cent price increase.
The report also includes recommendations for how the Federal and State Governments can change their policies to avoid consumer bill shock, including accelerating the introduction of renewables into the grid, as well as “changes to the laws and rules governing the economic regulation of monopoly networks, alongside the introduction of greater transparency and independent monitoring of network profits by the Australian government.”
What is missing is the political will to make changes. That’s the real scam.
Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’.