Power prices may not fall with clean energy target: ACCC

An Australian Competition and Consumer Commission inquiry into electricity prices has found increases of up to 90 per cent over the past decade.

File photo Source: AAP

A near-doubling in electricity prices over the past decade is putting unacceptable pressure on Australian households and businesses, the consumer watchdog has declared.

The Australian Competition and Consumer Commission has delivered its preliminary report examining retail electricity prices to the Turnbull government, providing yet more evidence of the woes besetting the energy sector.

It finds prices have risen up to 90 per cent for consumers in the eastern states over the past decade.

Residential prices increased 63 per cent since 2007 and the average household bill was about $1524 plus GST.

The ACCC found many households could not absorb these increases, especially those on lower incomes, with some people forced to cut spending on food and health to cover their power bills.

Similarly, businesses that couldn't pass on higher costs told the watchdog they were considering cutting staff or moving overseas and some have closed.

"It's no great secret that Australia has an electricity affordability problem," ACCC chairman Rod Sims said.

"What's clear from our report is that price increases over the past 10 years are putting Australian businesses and consumers under unacceptable pressure."

The main driver behind higher prices was network costs - the poles and wires - with retailer costs and green schemes contributing to a lesser extent.

Nearly half a bill is made of network costs, another quarter due to retail margins and other retailer costs, and just seven per cent the price of green schemes like feed-in tariffs and the renewable energy target.

The ACCC's main concerns are:

• insufficient competition in both generation and retail markets, leading to higher prices and making it hard for new players to join;
• over-investment in electricity networks in the past with too-high rates of return, placing an ongoing burden on consumers;
• some overly generous environmental schemes; and
• the complex nature of the market with consumers unable to opt-out but not having enough information to make informed choices.

While the ACCC's inquiry will run until June 2018, it has recommended the government immediately beef up the Australian Energy Regulator's powers to investigate possible breaches of existing regulation, including being able to compel people to give evidence, and strengthen the Energy Made Easy comparison website.

Treasurer Scott Morrison said information the ACCC had collected from electricity companies and consumers had been a key part of the government's considerations in forming its new energy policy.

The government will consider its preliminary recommendations and await the final report to shape further actions that make sure Australians have reliable and affordable energy, he said.