18 Oct 2012

Privatisation of Australian electricity networks urged

8:01 pm on 18 October 2012

Australia's state-owned electricity networks should be privatised and new pricing introduced to reduce costs for consumers, a draft Productivity Commission report says.

The report, Electricity Network Regulation Frameworks, says surging electricity prices in the past five years have been caused by the cost of the wires and poles that make up the network.

The 50% hike could be attributed to spiralling network costs, industry inefficiencies and flaws in the regulatory environment, AAP cites the report as saying.

Inquiry commissioner Philip Weickhardt says the current regulatory regime is undermining the capacity of network managers to run their businesses efficiently and puts up barriers to consumer involvement.

"There is no quick fix," he says. "But our proposed reforms can deliver a more efficient system and potentially save billions of dollars."

Privatising all state-owned electricity networks - while continuing to strongly regulate them - would improve efficiency and avoid the conflicting mix of state government influence on their corporations, the report finds.

Call for better representation of consumers

The report also finds the overarching objective of the current regulatory regime - the long-term interests of consumers - has lost its primacy.

It suggests the creation of a new industry-funded body with the expertise to properly represent consumers.

The suggested package of reforms could save an estimated $A1.1 billion in New South Wales alone, the report says.

Public feedback is being sought by the commission by 23 November, with the delivery of the final report expected by the federal government next April.