QLD electricity prices will double in five years: economist

HOUSEHOLD electricity prices across regional Queensland could double over the next five years providing the State Government billions of dollars in revenue in the process.

But the pain for struggling households could get a lot worse after the state's largest regional electricity provider, Ergon Energy, announced this week it had joined a court battle appealing a decision to cut the amount of money they can raise through power bills.

The Australian Energy Regulator recently announced its draft price determination that would allow Ergon and Energex to raise $17.6 billion from its customers between 2015 and 2020.

But both power companies claim they are entitled to an additional $2.2 billion and have joined forces with their southern counterparts to appeal the regulator's decision.

Queensland-based economist Jonathan Pavetto said electricity prices would continue to rise because the government was used to the revenue it received lining the state's coffers.

But he said the government had the power to stop rising electricity prices if it wanted to.

"Essentially the money is being taken from household consumers and funnelled into State Government coffers because they actually own the power companies," he said.

"The State Government could certainly reduce the squeeze on households if it wanted to, but that would mean it would also have to forgo some of the revenue it receives in the process."

Mr Pavetto said the primary reason electricity prices across the state were at a record high was because of the regulatory framework the power companies operated under.

"Effectively Ergon and Energex set their own prices and the regulator simply ticks off on it," he said.

"So irrespective of the market conditions at the time, the price they can charge consumers is locked in for a set period."

Queensland Energy Minister Mark Bailey said he would not speculate on any decisions that had not been made, but said power prices for 2015-16 would not be affected.


Topics:  economy editors picks electricity prices

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