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Pricing body weighs impact of July electricity price change on customers.

Electricity price rises will lead to different dollar changes in electricity bills for households depending on the amount of electricity that the household uses, and the specific price that applies to a customer, according to NSW'S pricing body.

The Independent Pricing and Regulatory Tribunal (IPART) announced today that NSW power bills are set to rise by up to 18.1 per cent from July.

On the impact of the 1 July 2011 price change on customers, IPART said a good measure of electricity affordability is the proportion of household disposable income spent on electricity.

"From our household survey we have been able to provide analysis of electricity bills as a proportion of disposable income. However, because our household survey has only covered Sydney and the surrounding areas, it excludes Country Energy customers"

While there are some households in Sydney and the surrounding areas for which electricity bills make up more than 10 per cent of their disposable income, for the vast majority of households electricity bills in 2011/12 are likely to make up 4 per cent or less of their disposable income.

However, households in these areas with disposable income below $18,000 a year spend on average just over 5 per cent of their income on electricity. For these low income houses, there is a large variation in how much of their disposable income they are paying for electricity bills, with some high consumption households paying more than 10 per cent of their income on electricity.

IPART said it is concerned about electricity affordability for low-income, high consumption households and believe that targeted assistance should be directed to these customers.

IPART Chairman Rod Sims said the price increases would be difficult for many families to deal with.

"We are particularly concerned that these price increases will affect households with large consumption levels and low incomes."

The NSW Government has, however, announced an increase in the existing Energy Rebate on 1 July 2011 to $200, increasing to $235 by 2014. It also announced that it will introduce a $75 Family Energy Rebate from 1 July 2012, rising to $150 in 2014.

"We do not welcome these price increases. However, the network fees that retailers must pay in 2011/12 will increase significantly. Retailers also have a legal obligation to meet their revised targets under the Federal Government's RET scheme. The price increases allow retailers to recover these increased costs of doing business.

"Inappropriate Federal and State policy settings may be contributing to customers paying more than necessary for electricity. Changes in policy settings could improve the future affordability of electricity by leading to more efficient costs of power supply," said Mr Sims.
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Publication:International Business Times - US ed.
Date:Apr 14, 2011
Words:443
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