NSW High Power Bills-Overtime is to Blame

NSW power bills are on the rise, thanks to power distributors paying their staff overtime and grid maintenance.
Published: Thu 08 Nov 2012

What happened  

New South Wales electricity customers are footing the bill for excessive overtime, paid by three of the state’s power companies, according to New South Wales auditor-general Peter Achterstraat.

Background

An audit, carried out on the state-owned electricity sector, shows that overtime is one of the main culprits pushing up by the cost of electricity, reports The Business Spectator. The audit identified power distributors Ausgrid, Endeavour Energy and Essential Energy as paying out significant sums of overtime. Ausgrid paid over one million hours of overtime last financial year, with 865 workers paid 50% or more of their base salary. According to the report, one worker received more than AUD$180,000 in overtime, almost double the basic salary of AUD$97,000. At Essential Energy, the number of those earning 50% or more of their salary was 200, and at Endeavour, 34. Achterstraat points out that overtime is not good for employees’ health, nor is it good for the customer’s wallet.

The investigation also indicates that consumers are using less electricity due to the rise in household energy bills, reports The Australian Financial Review. According to Achterstraat, the wholesale power price has fallen by 19.2% which reflects a decrease in demand.

Another reason for the rise in electricity costs, Achterstraat explains, is the cost of upgrading the state’s grid.  More is being spent on poles and wires which accounts for half the cost of residential electricity bills. The expenditure is necessary for meeting the growing energy demand during peak periods, writes The Sydney Morning Herald. Achterstraat recommends that companies improve their demand management and reduce peak demands which would place less pressure on the system.

The next highest cost is energy generation (25%). The cost of retailing the electricity contributes 10%; carbon tax added 8% and "other green schemes" contribute 7%.

This has seen an increase in retail prices. He explains, “If everybody wants to use their air conditioner and their dishwasher and their pool pump at the same time, we have to build, maintain and pay for an electricity system which can do that.” Achterstraat urges the three power distributors and transmission company TransGrid to avoid “gold-plating” the electricity network which is one of the causes of the 80% rise in prices over the past five years. Achterstraat says that distributors and TransGrid must ensure that their capital expenditure programs are “efficient and prudent.”

Despite lower consumption, the audit shows that the profits of electricity companies grew by $100m in the past financial year. According to Achterstraat, there is no price-gouging. He explains: “The electricity market is a very, very complex one and the price of electricity can vary from three dollars a megawatt hour up to $6000, depending on spikes [in demand]."

Last Word                                                      

The auditor general suggests that utilities improve their demand management. The power industry already knows it can save billions of dollars in costs by reducing demand during peak time consumption by implementing smart meters. However, smart meters have thus far received a cold reception. Most households believe meters won’t save them that much. Many are unhappy about smart meter deployments, believing that it will add to the already high power bills. Many suggest that the savings will be higher for larger commercial and industrial users as they consume more power. it looks as if the Australian government has much to do in order to radically change its campaign strategy to get everyone onboard.

Sources                

Business Spectator-NSW AG tells power companies to cut overtime

Sky News-Power distributors told to cut overtime

The Sydney Morning Herald-Power profits up by $100m despite users cutting back

The Telegraph-Smart meters get a chilly reception