Power grid over-valued

TASMANIANS are paying between $100 and $400 more for electricity each year than they should due to the state’s overvalued network assets, research by the Grattan Institute says.

Network infrastructure costs make up the biggest proportion of power bills for most consumers nationally.

The report estimates network costs for the average residential customer are about $700 per year.

It recommends the State Government write up to $520m off the value of assets in TasNetworks’ transmission business and up to $240m from TasNetworks’ distribution business, which would lead to lower bills for Tasmanian electricity customers.

The report blames poor State Government decision making for driving excessive investment in power networks over the past decade.

It says most of the excessive growth in Tasmania’s network assets appeared to be the result of over-estimating demand and either overbuilding or prematurely replacing assets.

“Consumers are currently paying too much for the elec- tricity network in Queensland, NSW and Tasmania,” the report says.

“Because of over-investment in the past 10 years — mostly driven by poor government decisions — consumers are paying more than an efficient cost of providing gridbased services.

“Removing this excess growth from the (regulated asset base) would reduce con- sumers’ bills and create better price signals.”

Energy Minister Guy Barnett said he was committed to lower power prices, but any financial writedown of TasNetworks’ transmission or distribution assets would result in operating losses and increase the state-owned company’s finance costs.

“This could lead to higher power bills for Tasmanian households and businesses,” Mr Barnett said.

“The Grattan Institute Report also fails to acknowledge the unique circumstances of Tasmania’s electricity transmission network, whereby our remote hydro-electric power stations and wind farms are mostly distant from where most of our energy is consumed — in our towns and cities” he said.