Networks and costs
Networks and costs
By Tony Pfeiffer, Network Optimisation Specialist
The rising cost of electricity is a topic that generates much discussion. There are many different and complex reasons why prices have increased in recent years, but one of the main influences is rising network costs.
Our network has been built to meet stringent regulatory standards. These have been set by Regulators based on the expectation that this level of service is what customers are prepared to pay for.
Our network also continues to deteriorate with age, which means more frequent maintenance as time goes on. In terms of cost, it all adds up.
Finally, our network needs to be able to cope with our harsh Queensland climate as well as peak demand, that time of day when demand for electricity is at its greatest.
As this demand grows, the network capacity also needs to increase to ensure we continue to provide a reliable supply of electricity.
While Ergon doesn't set the price of electricity, we can influence our contribution to the cost. It's our strategic goal to limit network cost increases to less than CPI over the long term.
Nowadays customers are using a lot less electricity - partly due to their adoption of energy efficiency measures that they can use and their acceptance of new technology such as solar panels. We've also experienced a reduction in the demand for new connections onto our network. The consequence of all of this has increased the unit price of energy. So what we've done is we've reduced our program of work, we've reduced our size of our workforce. And this has resulted in some efficiency gains in excess of $100 million.
We are also working closely with our customers to reduce demand on the network, and this helps us then manage our future capital expenditure onto the network and hence bring that unit price down. In the current period we have reduced our total expenditure by in excess of $1.5 billion.
To further reduce the pressure on prices, Ergon is focusing on optimizing its current assets and investments. This has begun with a review of the market and our network tariff strategy in consultation with customers, regulators and government.
Ergon has undertaken significant organizational restructuring to deliver better value. We hope that through our own savings and by working together with customers, we can all get power bills we can live with.
Read our business resources information to find out what you can do to reduce your business energy costs.