Energy giants over-charging by $400 million a year remains unresolved

With the final report expected to be released before the end of the month, Australia’s $400 million retail energy price gouging controversy remains to be unresolved.

Revealed back in May, 2018, studies found electricity networks and gas pipelines may have overcharged consumers by $400 million a year to cover their corporate tax bills.

As the single biggest factor in rising household electricity bills over the past decade, network charges are told to cover the cost of the energy transmitting poles and wires.

In order to cover corporate tax liabilities, electricity and gas companies can transfer these costs to struggling Australian consumers, usually totalling about $600 million a year.

What makes this more infuriating is that the actual tax bill incurred by the networks may only be around $200 million a year, meaning every Australian is being charged three times more than required.

Discovered during the Turnbull government reign, it was suspected the ex Prime Minister knew about the price gouging for years earlier but did nothing about it, but passed the information onto the Australian Energy Regulator (AER) to investigate the claims.

At the time, Treasurer Josh Frydenberg (then Energy Minister) said the AER would review how it modelled tax costs and whether national energy rules should be overhauled.

As these energy rules remain to be in place, any and all future changes have to be made before the next round of revenue determinations in April 2019.

Energy Networks Australia chief executive Andrew Dillon, whose organisation represents electricity networks and gas distribution businesses, denied all price gouging accusations at the time.

Why are network costs so high?

A report by the Australian Competition and Consumer Commission last year found network costs accounted for a staggering 48 per cent of entire residential bills.

Along with this, 66 per cent of the $347 average increase in power bills over the past 9 years (until 2016) came solely from network costs.

The ACCC unsurprisingly stated “a lack of transparency around network costs and the regulatory regime may not be suitable”.

Previously accused of increasing revenue by overspending on infrastructure and passing the cost on to consumers, a study by the Grattan Institute found about $20 billion of network investment was “excessive”.

As a result, network operators are justly accused of overcharging every power bill with excessive and unnecessarily priced network costs.

Who can you trust to give provide honest energy?

Hearing about the shameful claims against the retail energy giants, it is about time Australian consumers got a fair deal when it comes to their energy use.

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