‘Death spiral’ warning over electricity cost

CONSUMER advocates have warned an electricity death spiral is gathering pace in Queensland threatening the viability of power corporations, small businesses and irrigated agriculture.

The warning comes despite planned bill reductions in regional Queensland, which advocates say need to be more than doubled.

“Consumers need to be incentivised to remain on the grid, particularly business customers who represent 70 per cent of the demand for grid supplied electricity,” the Queensland Electricity Users Network co-ordinator, Jennifer Brownie, says.

“This will require the Queensland government to drop Ergon Retail prices for both business and residential customers by more than 10 per cent in 2021-22.”

The Queensland Competition Authority released draft determinations in March, showing a median consumption household will get a $119 or 8.6 per cent annual cut, while small businesses receive a 5 per cent or $109 reduction in 2021-22.

But in submissions to the QCA, the government has been accused of underestimating typical power bills and hiding the cost of its disastrous Solar Bonus Scheme.

Ms Brownie says Ergon Retail has a near monopoly and that the number of its regional small business customers fell 4500 or almost 5 per cent in the five years to 2019-20.

The state-owned electricity corporation “cash cows” are becoming liabilities as more demand is driven off the network by exorbitant prices, Ms Brownie says.

“The death spiral will accelerate if Ergon Retail prices and tariffs are not reduced,” she says.

There is also “clear evidence” prices are causing bill stress to businesses and households.

“Should the Queensland government and QCA continue to ignore the recommendations of a wide range of consumer advocates, the impact on regional jobs and the regional Queensland economy will be devastating and long lasting,” Ms Brownie says.

In a submission, Queensland Farmers Federation chief executive Georgina Davis says the long-term viability of the state’s agricultural industry remains in question.

Ms Davis says a growing number of producers were switching to off grid-connected power or moving to dryland farming and it is unacceptable the QCA continues to dismiss the need for more diversity in tariff design and cost-efficient tariffs.

A final determination is due to be announced on June 11.