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Monica Oliphant: South Australian energy retailers must stop gouging consumers

IT’S time for electricity companies to stop passing the buck.

This week AGL announced another 10-12 per cent price hike to long-suffering South Australians. Origin will increase bills by 6.5 per cent.

This will be an extra burden on people who are already struggling to make ends meet.

The reason? Well AGL said the rise was “mainly driven by the cost and availability of coal and gas supply for electricity generation as well as the changing mix of generation output”.

This seems strange since there is currently a surplus of coal and gas in Australia. We deserve a better explanation.

Unfortunately, because of non-transparency in the way our electricity is billed, we can’t see where our money goes when we pay our accounts.

In the coming year it is estimated that 46 per cent of what we pay will be put towards the cost of transmission and distribution (poles and wires), 45 per cent towards generating electricity and the retailer, and 9 per cent on environmental policies. Against each of these components there is a downward trend, except for one: retail.

That’s going up because retailers set fixed billing charges based on a contract price they pay for wholesale electricity. More of our electricity is being generated by wind and solar, which is getting cheaper to supply but is not as predictable.

As the penetration of wind and solar increases, the wholesale price of electricity can ­become more volatile. This increases the risk for retailers, and because they are getting more nervous that their wholesale contracts won’t deliver the same profits, they are taking out more expensive contracts and passing on the higher costs.

A better way to manage intermittency is with storage – from batteries, pumped storage or by adding solar thermal with storage into the network.

The two proposed solar thermal projects for Port Augusta, together with the planned interconnector between SA and Victoria, would not only help with cost reductions but allow our state to export power easily to the rest of the country when they need it most.

With 50 per cent penetrationof solar and wind expected here within a year, it is time there was an overall strategy for delivering reliable and cost-effective renewable energy to South Australians. Not only because of the changes happening at the larger end of the scale but also to manage the big changes at the community level where more and more of us are installing solar on our roofs.

AGL knows which way the wind is blowing – it has invested $3 billion in renewable energy in Australia. That’s great, but it’s time it and other retailers took some responsibility for helping to create price volatility rather than simply passing on the costs.

Monica Oliphant is a past president of the International Solar Energy Society and 2016 SA Senior of the Year.

This was originally published by The Adelaide Advertiser on June 16, 2016