Rising electricity prices buck the trend

By: David Darcy, CEO Greenlight Training

The Grattan Institute has released the findings of its investigation into the electricity transmission and distribution industry in a report entitled Shock to the system - Dealing with falling electricity demand.

Interestingly, customers continue to face electricity price rises despite a fall in demand for electricity - an outcome that bucks the norm in most markets when it comes to products with falling demand, according to the report.

The report criticised the industry regulator, the Australian Energy Regulator, for allowing electricity companies to “earn excessive profits by setting tariffs that are too high given the low risk they face as monopolies”.

Should demand continue to fall, the high cost of maintaining a network that is oversized for the electricity used by consumers, may see prices rise even further. The Grattan Institute offered what it thinks needs to change in order for the industry to avoid serious consequences.

''Network businesses have the incentive to build more infrastructure assets, and the customer bears all of the risk if they become redundant. If companies carried some of the risk of falling demand, they would have stronger incentives to avoid overbuilding.''

If prices continue to rise, you, as an accountant, need to be aware of how to better manage your businesses resource usage and our Accounting for Energy course will allow you to do just that.

The course will help you to recognise and deal with the risks in energy management and help you to identify the opportunities that also exist in Australia, allowing you to operate more strategically and to contribute to your organisation’s sustainability objectives.