Productivity Commission report notes reasons for electricity price increases

Business owners interested in finding ways to reduce their energy costs may find the results of a Productivity Commission draft report on electricity prices intriguing.

The report - entitled Electricity Network Regulation Framework and released yesterday (October 18) - suggested that the energy market needs to focus on making decisions based on the best interests of customers.

"The current regulatory regime is undermining the capacity of the network business managers to run their businesses efficiently, and puts up barriers to consumer involvement.

"There is no quick fix, but our proposed reforms can deliver a more efficient system and potentially save billions of dollars," presiding commissioner Phillip Weickhardt said.

Findings in the report revealed that the maintenance costs of electricity networks across eastern Australia embody one half of people's average energy bills.

Furthermore, the report outlined that it is these networks costs that have played a role in the electricity prices increasing over the last five years.

The commission has made several recommendations including introducing more cost-based pricing and using more energy efficient technology such as smart meters to help reduce consumption and prices.

The report says that this would be a step in the right direction and could help to reduce power network related costs.

The government is seeking public feedback about these recommendations. The final report is due to be released in April 2013.

The Productivity Commission is an independent body that conducts research and also acts as an advisor about various social, economical and environmental issues in Australia.

By Charlie Moore