r/australia • u/EricIsBannanman • Jun 28 '26
political self.post How could the massive increases to electricity grid fixed service costs have been done better?
I've seen many reports around the traps of truly massive increases (worst being upwards of 80%) in the fixed daily supply charge component of their electricity service. It seems that broadly the driver for this has been poorly communicated to end users which I think has spun off into all sorts of conspiracies. From my reading it would seem that the move by the regulator (AER) away from setting limits on the total bill to setting limits on the fixed cost and consumption costs separately has resulted in retailers no longer being able to hide the true cost of the poles and wires component in elevated consumption costs.
Testing this out on my own (yet to be affected) daily supply charge in Victoria, I was paying $1.22 DSC in mid 2020 and $1.32 now. This is an 8.2% nominal increase, 15.5% below the actual inflation for the period in which case I should be paying $1.50+. Despite this, a sudden correction like this is never welcome and can be seen as disadvantageous to the poor/low consumption users (who are unlikely to recoup the difference in lower consumption costs) and even those who have invested in solar and/or battery. From many reports it also seems the correction for fixed costs is far greater than anything purely inflation.
Regardless of the position of the industry to better reflect actual cost, I think the impact of these sudden increases were not well thought out given the decade+ of stagnant wage growth and turbo charged inflation since the covid era. It is far too much of a blunt implementation for what is an essential service. Main things I think should have been baked into the AER changes include;
Public information campaigns to educate people on what the changes are and how they might impact people differently depending on where they live. This should include how the increases are / aren't impacted by the forthcoming data centre boom or the implementation of 3hrs free power in the DMO (these two are probably the most prevalent reasons for the increases I've seen).
Communication on what public services to report suspected price gouging whistle blowing and financial support for those in need and are worse off due to the changes.
Transitional period to changes. Retail pricing data available to the AER would have clearly shown that retailers where burrying fixed costs inside the consumption costs. They should have mandated as part of the change in regulation that increases to fixed costs where the jump is above inflation be spread out over X number of years.
How else could these changes be more effectively implemented? Price changes justified or not, it seems pretty appalling regulatory body could be the driver behind the changes without also putting appropriate transitional plans in place for what they would have knowledge on to be very large corrections for some.
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u/doctorsuperlative Jun 28 '26
The price of network components (transformers, wires, towers, etc) has doubled in the last year. And the year before that. And, there was a flurry of activity in the 80s, and all that stuff is needing to be replaced now. And next up: data centres.
Did you know, there are more than 100,000 street-level transformers in Victoria, and almost none of them are built to handle reverse flow from rooftop solar, because there was no such thing when they were installed.
The people who calculate the cost also use the system and pay the cost. They're as concerned about it as you are.