Wedoany.com Report-Mar 13, Electricity prices in Australia's eastern region could surge by nearly 9% from July, the country's energy regulator said on Thursday, posing a risk to the centre-left government's re-election plans as households and businesses battle higher costs.
High tension electricity towers are seen close to a power station on the outskirts of Melbourne February 24, 2011
The Australian Energy Regulator (AER) expects that household power bills will rise between 2.5% and 8.9% in southeast Queensland, South Australia and New South Wales, following its draft decision to raise the default market offer - the maximum price energy retailers can charge customers.
Small businesses could face an increase ranging from 4.2% to 8.2%, the AER said.
AER Chair Clare Savage said that wholesale market and network costs - the two largest components that influence market prices - increased between 2% and 12% for most customers.
"We have given careful scrutiny to every element of the (default market offer) cost stack to ensure prices are a reasonable reflection of the costs of a retailer to supply electricity," Savage said in a statement.
Savage said outages at coal-fired power stations, low solar and wind output coupled with high demand have triggered power price spikes in Australia, where two-thirds of power generation comes from coal- and gas-fired plants.
Victoria's Essential Services Commission, which sets the default prices in the state, projected an average annual rise of less than 1% for households, or about A$12 ($8), and 3% for small businesses, or A$103 ($65).
Federal Energy Minister Chris Bowen said AER's draft decision underscored the urgency of integrating cheaper energy sources such as renewables into the grid. He urged customers to select the most competitive price plans available in the market.
"While today's news is mixed it does show energy retailers are responding to competition," Bowen said in a statement.
The Labor government, led by Anthony Albanese and currently trailing in polls, faces a national election due by mid-May as it struggles to lift support despite implementing numerous measures aimed at benefiting families and businesses.
