Power company super-profits pushing up bills

Things might be getting tough for most of us, but it’s a good time to be an energy capitalist. Energy distributors have scored billions in extra profits due to regulatory loopholes and are set to make even more in the months and years to come.

In New South Wales, South Australia, Victoria and south-east Queensland, energy networks have made super-profits 67 percent higher than “normal profits” in the last eight years, according to data from the Institute for Energy Economics and Financial Analysis.

These distributors have monopoly control over patches of infrastructure, so regulators are supposed to prevent them from price gouging. IEEFA researcher Simon Orme calculates that, by overestimating operating costs and charging customers based on the exaggerated figures, energy companies have managed to squeeze an additional $10 billion on top of the $15 billion in “normal profits” that they would have made.

Orme estimates that this super-profit loophole will be responsible for between 15 and 30 percent of the coming energy price hikes for most of Australia’s east coast.

While the energy companies were raking it in, more than a quarter of households—including nearly half of renters—struggled to pay their skyrocketing bills, according to research published by the Australian Energy Regulator last August. Another 37 percent anticipate difficulties paying bills in the next few years. Only 2 percent of households were not at all concerned by electricity prices.

You can get a sense of the cost-of-living crisis from how households are planning to cut back on energy usage and spending. Respondents to the AER survey said that they plan to “eat less”, “[sit] in cold, dark rooms”, “wash less” and “freeze” to deal with energy costs.

And the price hikes just keep coming. Power bills across the east coast of Australia are expected to increase by around 20-24 percent on average from July.