Consumption vs Price
Consumption vs Price
By Ian McLeod
There is a lot of noise across news media, social media and other forums at the moment about electricity prices. I'd like to share with you some facts about electricity prices in regional Queensland.
Electricity prices in regional Queensland – the facts
Some of this discussion is influenced by anxiety over high electricity bills. This is fuelling confusion for a number of regional Queensland customers about the realities of their consumption and the price they are charged for power.
Electricity bills are based on a cents per kilowatt hour (c/kWh) consumption charge for the amount of electricity used, plus a daily service fee on some tariffs.
The facts are that the vast majority (around 98 per cent) of regional Queensland residential and business customers are charged the same regulated tariffs for electricity regardless of their location. This means a customer in Cooktown is paying the same rate for electricity as a customer in Mackay, Toowoomba or Birdsville.
Regulated retail tariffs – the amount you pay for your power from Ergon Energy – are tariffs that are set by the Queensland Competition Authority each year.
The amount we use can make the biggest difference
Every household and business uses electricity to satisfy their own schedules and needs. Understanding how and where that electricity is being consumed is rarely accounted for by many customers – aside from a final dollar amount on bills.
There are factors relating to where you live in Queensland that can lead to higher electricity consumption, driven purely by climate and customers' use of appliances.
For example, you may be surprised to know that the average Far North Queensland residential customer used nearly 1000 kilowatt hours more electricity than the average South West Queensland customer last year.
That same average Far North customer used a whopping 1,600 kilowatt hours more electricity than their fellow Wide Bay Queenslander. On current Tariff 11 rates this could be an extra $475 a year in consumption.
There are a number of factors that cause this, but climatic variance is no doubt the biggest. Appliances such as air conditioners and other conveniences such as pools (pool filtration and pumping) to keep us cool are among the primary differences.
Take a look at average consumption pattern in northern parts of the state compared to southern areas between winter and summer for example.
Many northern districts have up to 73 per cent more consumption in an average customer's summer bill than in autumn and winter quarters.
While Ergon is acutely aware of customer angst in relation to electricity prices, using 70 per cent more power from one quarter to the next will always have the biggest bill impact.
Is there any choice?
Full retail competition was introduced by the Queensland Government in 2007.
However the costs of distributing power across the vast reaches of regional Queensland and government subsidies to smooth these costs across all regions (in the form of regulated tariffs) have limited the effectiveness of competitive retailing of electricity into most regional areas.
In 2012/13 the Queensland Government subsidised electricity in regional Queenslanders to the tune of about $600 million.
Ergon supports the Queensland Government's views on competitive retailing of electricity, although there will no doubt need to be changes in the way subsidies are delivered for a fair and considered retail market for all regional Queensland customers.
Ergon is not waiting for change however. We are restructuring our business to deliver our service more efficiently and have already made changes to reduce our costs.
A key driver of recent electricity price rises in Queensland has been network costs – particularly the costs of meeting peak demand (the times of the day when demand for electricity is highest). There has been some evidence of a slight decrease in overall consumption of power across the state in the last couple of years, although peak demand is still growing in many towns and cities.
Ergon has come a long way towards controlling its costs. As such, the network component of the end price of electricity is expected to be at or less than Consumer Price Index (CPI) increases from next year.
Our cost reductions will reduce pressure on electricity prices and help deliver fair bills for everyone.
High electricity accounts – are complaints increasing?
Below is the electricity consumption data of a Cairns customer who was concerned about a recent large power bill, but couldn't understand why their bill was so much more. A quick analysis revealed the customer was in fact using around twice as much power in comparison to their usual winter quarter bills.
Ergon's Energy Advisory Team helps customers with similar enquiries every day. We regularly hear from customers who say they "are not using any appliances", but further investigation more than often reveals new appliances in the premises, more air conditioning being used or extra occupants in the house.
Consumption information is clearly documented on electricity bills, including comparisons with previous bills.
Ergon is doing what it can to reduce pressure on electricity prices, but higher consumption will always mean a higher bill.
The number of high account enquiries from month to month can change significantly – often related to seasonal variance. However the number of high account enquiries to our Energy Advisory Team in January this year compared to January 2013 was in fact down by around 22 per cent.
When our hot summers return it is very likely that enquiries about high accounts will increase. Post-summer bill shock is often a symptom of high air conditioning usage.
Ergon Energy has a dedicated Energy Advisory Team who can help people understand what may be causing high accounts. They can offer advice on efficient use of electrical appliances.
There are many ways customers can help reduce their bills and the Ergon Energy website has lots of information to help.
Alternatively, if people have concerns about an unusually high bills or trouble paying, they should contact Ergon on 13 10 46 during business hours for help.
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