Your household power bills could be 15% cheaper, if Australia's energy regulator was doing its job

theconversation.com
4 min read
fairly difficult
Takeover bids for Australia's last listed energy network companies suggest these monopolies are charging way more than necessary.
If you're like most Australians, the single biggest chunk of your energy bill — about 40% — goes to a network services company, which owns and operates the transmission lines or pipes delivering electricity or gas to your home.

But evidence from takeover bids for Australia's last two publicly listed electricity network services companies suggests you are paying more than you should.

These prices are set by the Australian Energy Regulator, because network services are monopolies: you can choose your energy retailer, but not the lines or pipes through which the electricity or gas flow.

It's the regulator's job to determine a fair price for these services — one that doesn't shortchange the service provider or gouge consumers.

But the Australian Energy Regulator has not been getting these pricing decisions right, according to calculations that can be made using the bids by overseas investors for AusNet Services Ltd, the biggest energy network provider in Victoria, and Spark Infrastructure Group, whose assets include South Australia's electricity distribution network.

Being listed on the stock exchange, they must disclose financial information. This information enables analysts to calculate how much investors value them compared to the Australian Energy Regulator.

This calculation — known as Regulated Asset Base (RAB) multiple — suggests the regulator has been allowing energy network companies to charge way more than necessary.

Read more: Energy prices are high because consumers are paying for useless, profit-boosting infrastructure

Valuing AusNet

AusNet owns and operates almost all of the electricity transmission system in Victoria, and also big gas and electricity distribution networks. It is the subject of a takeover…
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