Increases in tariff arrangements

State Government announces increases in tariff arrangements.

Energy Minister Peter Collier has announced an increase to the State's electricity retail tariffs, following last month's release of the Office of Energy's (OOE) final recommendations.

Householders can expect a 10 per cent rise on April 1, followed by 15 per cent on July 1, which is significantly lower than the OOE recommendation of 52 per cent to bring residential prices up to cost-reflective levels.

Small businesses face an increase of five per cent in April and 10 per cent in July, while tariffs for big businesses will go up by 10 per cent in April and 10 per cent in July.

The OOE recommendation for small businesses in 2009-10 was for a 29 per cent increase and up to a 51 per cent increase for large businesses, to bring electricity prices up to cost-reflective levels.

"For householders, the average increase will be $4.74 per week," Mr Collier said.

"For those customers facing financial hardship and who can access rebates that are available, the increase will be an average of $3.21 per week.

"This Government has made a difficult yet responsible decision, taking into account the impact of the current financial downturn.

"We understand that families, householders and businesses are already under financial strain, yet we also realise the pressure that will continue to be placed on this State if we don't start working towards cost reflective tariffs.

"To that extent, we will provide a considerable package of rebates to eligible customers and eligibility for air conditioning rebates will be expanded."

An additional $12.6million would be provided through increased rebates, an increase to the Hardship Utilities Grant Scheme and additional hardship assistance measures, such as introducing a fridge replacement scheme and expanding energy efficiency programs.

"The Government is also considering a package of energy efficiency measures, including smart meters, to help consumers better manage their electricity use," the Minister said.

"For small to medium businesses, the Sustainable Energy Development Office is developing a voluntary energy efficiency program that will include rebates for energy audits and energy management plans, as well as grants to implement these initiatives."

A decision will be made on future tariff increases after consideration of the Commonwealth's Carbon Pollution Reduction Scheme and the Economic Regulation Authority's determination of Western Power's Access Arrangement 2.

"There is also uncertainty regarding the future economic outlook for the State, which needs to be considered," Mr Collier said.

The Minister said Verve's financial performance had been under significant pressure because electricity tariffs did not reflect the cost of generating, transporting and retailing electricity.

He said this was a direct result of the former Labor government's refusal to address this issue in the eight years it was in office.

"In the two years following disaggregation, Verve Energy's before tax losses have been $75million and $184million," Mr Collier said.

"If there are no tariff increases, indicative modelling suggests these losses will reach about $640million by 2009-10. The approved tariff increases will reduce these losses by about $320million.

"It is important that tariff increases be implemented urgently to address the poor financial performance of Verve Energy.

"The previous government has been subsidising fixed tariffs by limiting the revenue available to Verve Energy, which is resulting in the corporation's poor financial performance, and losses will continue until it is able to receive revenues that support its costs.

"The level of electricity tariffs must support the continued development of electricity supply to ensure investments are made to meet demand.

"Otherwise, security of future supplies will be threatened."

Minister's office - 9213 7150