The Coalition Government will introduce legislation to Parliament this week to close a legal loop hole that would have cost Victorians up to $94 million in additional electricity supply charges and delivered electricity distribution businesses a huge windfall gain, Minister for Energy and Resources Michael O'Brien said today.
"The previous Labor Government created this legal loophole and exposed Victorians to these unjustified electricity price hikes," Mr O'Brien said.
"The Victorian Coalition Government is fixing Labor's mess and protecting Victorian households and families from increases in regulated electricity charges of up to $13.50 in 2013.
"Changes introduced by the Coalition Government will reinstate incentives for energy distribution companies to offer quality services, including reliable power supplies, responsive call centres and efficient overall management of the grid.
"The community rightly expects and deserves these standards and if power companies don't meet them, they should face financial consequences – resulting in reduced charges to consumers.
"The Coalition Government believes the $94 million is better off in the pockets of Victorian families than the bottom lines of electricity networks that have not met performance standards," Mr O'Brien said.
Electricity network companies operate under a performance and service standards scheme that rewards them for exceeding targets and penalises them for failing to meet them.
A number of Victorian electricity network operators had failed to meet performance standards, and were due to receive financial penalties through reduced charges as a result. However, the Australian Competition Tribunal (ACT) recently ruled that the independent Australian Energy Regulator (AER) could not legally enforce the prescribed revenue cuts for those businesses which have not met the target level of service.
The Tribunal pointed to a legal loophole created by the former Labor Government in the transition of state powers to the new national AER.
Changes to the Energy Legislation Amendment Bill 2012 will be introduced to Parliament to correct legislation governing the AER's Service Target Performance Incentive Scheme and the Efficiency Benefits Sharing Scheme.
It will make clear the legal intent of these schemes, so that energy distribution businesses' revenues are properly regulated for the five-year review period, which started from 2011.
The amendments will ensure that the status quo is enforceable, so that businesses will be legally required to face the appropriate revenue cuts for not meeting their performance targets last year.
The ACT decision benefited United Energy and Powercor, but SP AusNet and Powercor are currently before the Federal Court seeking to use the same loophole.
The Coalition Government's amendments will prevent the following increases in residential power bills in 2013:
- Around 640,000 United Energy customers across east and south east Melbourne and the Mornington Peninsula will avoid an increase in their power bills of around $13.50;
- Around 700,000 Powercor customers in central and western Victoria, as well as Geelong and Melbourne's outer western suburbs, will avoid an increase in their power bills of up to $10.50; and
- Around 640,000 SP AusNet customers across eastern Victoria will avoid an increase in their power bills of around $3.