PM warns states over power costs

Julia Gillard has given state governments a deadline to report back to COAG on ways to stop electricity price hikes, warning them that she could, if forced to, hit them with ”the big stick of regulation”.

In a speech in Sydney today, the Prime Minister took the states on over rapidly rising power costs, demanding they do more to curb price increases.

Ms Gillard told the Energy Policy Institute that she had written to premiers and chief ministers, saying that she wants energy policy solutions on the table by the end of the year.

But state and federal Coalition MPs have hit back, arguing that the carbon tax is to blame for rising power costs.

The Greens are also unimpressed by the plan, saying the COAG process will be too slow and that the issue should be referred to a parliamentary inquiry.

Today, Ms Gillard insisted that that the current rate of electricity price increases – excluding the carbon price – cannot continue.

”Power bills have become the new petrol prices,” she said.

”Australia did not need nearly 50 per cent price increases for households over the last four years – and Australians can’t afford the same kind of increases over the next four years,” Ms Gillard added.

The PM is going on the front foot both to separate in people’s minds the general rises from those flowing from the carbon tax, and to show that she is standing up for battlers who are struggling with cost of living pressures.

”It’s a huge cost to our economy,” she said. ”And it’s a threat to fairness in our society.”

Arguing that power price rises fall far too heavily on battlers who can’t afford new, more efficient white goods or solar panels, the Prime Minsiter said this is exactly the type of issue that a Labor government should be looking at.

Ms Gillard said her preference was to work cooperatively with the states but she warned that she would use the “big stick of regulation” – in the consumer watchdog and Energy Regulator – if necessary.  “One way or another, we’re going to get this done,” she said.

Her criticisms do not apply so much to Victoria, where electricity supply has been privatised. But there is state ownership of electricity assets around much of the country, including NSW and Queensland.

“In many places around Australia, the state governments both own lucrative electricity assets and regulate parts of the electricity market,” Ms Gillard said.

She pointed out that half the extra costs have been due to increased network charges: people have been paying more for the so-called ”poles and wires”, not to produce electricity but just to move it around the system.

Ms Gillard identified unfinished market reforms, and the action – and inaction – of some state governments as causes of the price rises. Some were doing well financially out of current arrangements and can, and should, do more to cut price rises, she said.

“The comparison between the private and publicly owned utilities shows the states are doing very well out of this arrangement. Following the recent round of price increases, revenue for enterprises wholly owned by state governments is up 50 per cent over the previous five-year period.”

She said that revenue for the rest of the market grew less than 30 per cent for the same period.

The Coalition didn’t take long to hit back at Ms Gillard’s comments.

Even before the Prime Minister delivered her speech, the opposition’s climate spokesman, Greg Hunt, said she was in “complete denial” about the impact of the carbon tax on electricity prices.

In a statement, Mr Hunt said that Ms Gillard’s speech was a “belated concern” about electricity prices: “Prime Minister Gillard has taken the gold medal for high electricity prices and hypocrisy.”

Queensland Electricity Minister Mark McArdle said the federal government should have acted earlier to curb electricity prices.

“I cannot believe that after almost five years in government, the Prime Minister suddenly decides she must act to do something when she should have acted years ago,” Mr McArdle told ABC Radio.

NSW Energy Minister Chris Hartcher also hit back, arguing the carbon tax was the biggest factor behind electricity price rises.

“If the Prime Minister wants to help battling families … then the remedy is in her hands – repeal the carbon tax,” Mr Hartcher told ABC Radio.

Greens leader Christine Milne said that energy market rules needed to be changed “swiftly” so that people would prioritise saving energy not selling energy.

“It is the multi-billion dollar gold-plating of the old, coal-based energy grid that is happening right now that is driving energy bills ever higher, and we need swift action to turn that around,” Senator Milne said.

Senator Milne said that sending the issue to COAG would be a “recipe for delay” and called for a Senate inquiry instead.

“I have a reference for a Senate Inquiry that I’ve been talking to both the government and Coalition about supporting to bring on reform so we can bring down power bills as fast as possible. Let’s see how genuine they are.”

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