Surging energy prices have pushed electricity disconnections to record levels, with the planned increase in gas prices expected to undermine the longstanding cost advantage of gas over electricity, a forum was told on Tuesday.
The NSW pricing regulator, the Independent Pricing and Regulatory Tribunal, has flagged price rises for regulated gas users of 17.6 per cent from July 1, although the increase will be less if the carbon tax is removed.
The planned price increase will put more pressure on households, which are already struggling to pay their energy bills, as signalled by a surge in electricity disconnections. As many as 17,051 households were disconnected in the six months to December, according to data from the Australian Energy Regulator. The full year to June figure is set to top 34,000, a senior policy officer with the Energy and Water Ombudsman NSW, Chris Dodds, told the public forum into planned gas price rises on Tuesday.
This is substantially more than the 24,800 disconnections recorded in the year to June 2013. Another 2695 households were cut off from gas supplies in the half.
At the same time 20,798 households received government assistance in paying their bills as of the end of December, the most recent data. Additionally, moves by the government to shift the number of households on to the Newstart allowance from other forms of welfare, will see cuts to their benefits, which will push up the number of households unable to pay their gas and electricity bills, Mr Dodds said.
”These are real and significant price increases,” he said, as domestic gas prices move closer to levels where gas will lose its advantage over electricity for home and water heating.
Pushing gas prices higher is the development of a number of gas export projects in Queensland, which are lifting domestic prices to international levels.
Some lobby groups have called for gas to be set aside, or reserved, for domestic users, which would help to insulate them from the surge in gas prices.
However IPART chairman Peter Boxall said any such policy would not be ”cost-free”.
”If export opportunities arise … if business doesn’t take advantage of that, that’s income forgone,” Dr Boxall told the forum.
”To put in place [a reservation policy] is not cost-free.”
Any such policy decision is for government to make and beyond the powers of the tribunal, he said. ”We cannot solve everything.”
Gas retailers were also told that the surge in prices could lead to a ”death spiral” for the industry if households were forced to move away from using gas as it became less competitive with electricity.
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