Population growth, an ever-increasing demand for energy and the need to expand and upgrade Queensland's electricity infrastructure are among the many factors that impact on the cost of electricity.
How electricity costs affect prices
The price you pay for electricity is made up of:
- generation costs - creating electricity at a power station
- transmission costs - building and maintaining Queensland's extensive high-voltage powerline infrastructure
- distribution costs - building and maintaining Queensland's network of poles and wires that deliver electricity to homes and businesses
- retail costs - connecting customers, billing customers and managing accounts.
- green scheme costs - costs associated with the Australian Government's Renewable Energy Target.
The carbon tax, which added to the cost of electricity in 2012-13 and 2013-14, has been repealed by the Australian Parliament. The repeal was backdated to 1 July 2014. The following costs impact on electricity prices.
Queensland's electricity distributors Energex and Ergon Energy will spend about $15.6 billion from 2010 to 2015 on electricity network infrastructure, maintenance and operations to cope with increased electricity demand. We all pay a portion of this cost through our electricity bill. This investment in our electricity system increases the transmission and distribution components of the retail electricity prices.
Increasing costs of coal, gas and other fuels used to produce electricity has raised the generation cost in retail electricity prices. As fuel costs increase, they drive up the price we pay for electricity through the regulated tariffs set by the Queensland Competition Authority (QCA) and the market contracts offered by private retailers.
Current regulated electricity prices
Current regulated electricity prices, which now exclude the cost of the carbon tax for business and residential customers, will apply until 30 June 2015.
Regulated electricity prices
The Queensland Government has delegated responsibility for determining regulated retail electricity prices from 2013-14 to 2015-16 to the QCA. Subject to certain pre-conditions being met, market monitoring will be introduced on 1 July 2015 to replace retail price regulation for residential and small business consumers in South East Queensland, provided government is satisfied customers will be able to benefit and there is adequate protection for vulnerable consumers.
The potential switch to market monitoring will place extra pressure on retailers to offer better prices and allow consumers the opportunity to choose electricity options that most suit their individual needs.
Under market monitoring, the QCA will continue to regulate electricity prices in regional areas while the government investigates options to expand competition outside South East Queensland.
Retail electricity prices for large electricity customers in SEQ consuming more than 100 megawatt hours per year have been deregulated since 1 July 2012.
The costs involved in supplying electricity to Queenslanders in regional and remote areas are much greater than for those in South East Queensland. This is due to the high costs of transporting electricity over long distances and the smaller number of people in remote and regional Queensland to share the costs of the towers, poles and wires that deliver them electricity.
The Queensland Government supports regional and rural Queenslanders by subsidising them for the additional costs involved in supplying electricity outside South East Queensland, through payments to Ergon Energy. This subsidy is called the Community Service Obligation payment.
- Last reviewed
- September 8, 2014