Energy prices have been increasing recently due to a range of factors across the energy market.
Australia’s Ministerial Council on Energy has noted that price rises are expected to occur in coming years due to
required investments to meet the challenges of ageing infrastructure, growing demand and policies to reduce
greenhouse gas emissions.
Energy consumers typically see one bill which can be affected by price and cost changes across the entire
energy chain, so price changes can reflect developments in the energy generation sector, the wholesale market,
the cost of transporting energy through pipes and wires, or retail sector.
Typically, the cost of transport of energy through energy networks accounts for around 50 percent of the final
price to residential or small business users.
Across most of Australia network charges are approved by the independent Australian Energy Regulator through
public network price review processes which examine, test and adjust expenditure and prices proposed by the
network. The national regulator is tasked with only approving pricing proposals that meet the requirements of
a detailed energy regulatory framework. The core guiding objective of this framework is to ensure that outcomes
are achieved that promote the ‘long term interest of consumers’ in efficient prices that safeguard longer-term
investment, reliability and safety.
A recent series of price review processes have approved significant capital investment in network assets due to
recognition of a need to renew what are typically ageing networks, meet higher peak network demand from
the growing penetration of a variety of gas and electric household applications, and sustain or improve overall
network reliability. Over $42 billion of capital expenditure has been approved by energy regulators to help meet
these needs over the next five years.
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