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Power prices in NSW on the rise despite wholesale cost cut

3rd Nov 2011

The New South Wales auditor-general says the state's households may be paying too much for power.

In his assessment of the electricity industry, Peter Achterstraat reported that despite wholesale electricity prices falling by 16.9 per cent, household bill are set to rise by over 17 per cent next year.

Mr Achterstraat acknowledged the increased network costs in order to transport the electricity from power stations to customers, but still described these as being higher than necessary.

"When electricity leaves the power plant gate, it costs approximately 3.5 cents per kilowatt hour. But by the time you use it in your toaster it costs approximately 26.5 cents per kilowatt hour," Mr Achterstraat said.

The body that sets NSW energy prices - Independent Pricing and Regulatory Tribunal of New South Wales (IPART) - has previously expressed the same concern.

Also examined by the auditor-general was the sale of electricity assets by the former Labor government.

Mr Achterstraat found a loss on the sale of electricity generation output delivered an overall profit of $1.23 billion - well below the $3.272 billion predicted by the government at the time.

The finding comes just days after a report by retired judge Brian Tamberlin QC acknowledged that the electricity trading rights were sold for much less than they were worth.

The sell-off saw three state-owned electricity retailers transferred to the private sector, leading more households to consider other alternative, such as solar power.

This shift to renewable energy is one that Mr Achterstraat also encouraged - his report confirming the significant cost of the federal government's efforts to reduce reliance on coal has had on Australian households.

NSW ratepayers are not the only ones struggling with the price of electricity - Victorians are paying more than they need to for the installation of new smart meters.

State energy minister Michael O'Brien told the ABC that he was disappointed with the energy regulator's decision to allow power companies to charge more for the installations in 2012.

As a result, the average Victorian power bill is set to rise between $7.90 and $17.25 next year.

Increasing electricity prices may act as an incentive for households to make the switch to solar power - a rooftop solar panel system would allow a home to easily generate their own power and rely less on their local electricity grid.

Posted by Bob Dawson - News editor

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