Baird claims electricity prices will drop after privatisation

The age and condition of the systems vary. Picture: REUTERS

The age and condition of the systems vary. Picture: REUTERS

Premier Mike Baird has responded to union claims household bills will increase if the state's electricity poles and wires are sold, by releasing a Treasury-commissioned analysis showing customers have paid lower charges in Victoria and South Australia after privatisation.

But the report by Ernst and Young notes one reason for the discrepancy is government-owned businesses in NSW and Queensland have recently spent billions upgrading their networks and Victoria and South Australia may soon follow suit.

As unions backed a call for a referendum on the issue and MPs prepared to debate it in party room meetings on Tuesday, Mr Baird said he was ''not in the business of implementing policies that increase electricity bills for NSW families''.

"The scare campaign being unleashed by Labor and the unions simply isn't backed up by facts - network prices have been more than 100 per cent higher for NSW's publicly owned system than in the privately owned Victorian or South Australian networks,'' he said.

The state-of-play in the power market.

The state-of-play in the power market.

But Stop the Sell Off campaign director Adam Kerslake said the reason behind network charge increases in NSW was changes to the reliability standard which had ''delivered a more reliable electricity network in recent years''.

''Investment in electricity assets comes in cycles and in NSW and Queensland these … cycles have just concluded while in Victoria and South Australia this cycle is about to commence,'' he said.

Mr Baird and deputy Premier and Nationals leader Andrew Stoner are expected to take to their party rooms a proposal to sell 49 per cent of the electricity network businesses which own the ''poles and wires'', including possibly allowing small investors to participate.

Net proceeds are being estimated at more than $15 billion but the proposal has been met with opposition from sections of the Nationals concerned about regional job losses and warnings from Labor and the unions that prices will rise.

The Ernst and Young report examined the long-term trend in prices charged by the network businesses, which are passed on to residents and businesses as part of their electricity bill.

It compared the movement in network prices in Victoria and South Australia, which have privatised the businesses, with those in NSW and Queensland where they have remained in government ownership.

It found between 1996/97 and 20012/13 network charges rose on average 122 per cent and 140 per cent in NSW and Queensland respectively.

This compared with an average 18 per cent fall in Victoria between 1996-2013 and a 17 per cent fall in South Australia between 1998/99 and 2010/11.

The authors say this ''illustrates that network prices for government-owned businesses have increased at a faster rate than they have for privately-owned businesses - where they have fallen.''

However, they also note that factors including the starting price level, the age of the assets and therefore the need for investment and service standards ''can and do contribute to the discrepancy''.

''For example, over some of this period, the networks in NSW and Queensland have invested particularly heavily in their networks,'' the report says.

''In contrast, the businesses in Victoria are approaching a stage in their life cycle which may require substantial further investment.''

smh.com.au

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