australia: July 17, 2009

Electricity network charges will increase from between 20 to 40 percent in New South Wales and 15 to 20 percent in Queensland for the financial year 2009/10. These are very substantial increases that will have a big impact on larger businesses during these recessionary times. The increases are unprecedented in recent times and have come in response to the need for distribution network infrastructure upgrades.

The Sydney central business district has had well publicized major blackouts wherein fault has been laid at poor network services. The current network infrastructure is inadequate in coping with the rapid increase in electricity demand. The increase in demand is being fueled by the uptick in domestic air-conditioning systems. Peak demand is outpacing the overall increase in consumption with demand management schemes being introduced in order to assist in dealing with this issue.

In the past, the regulation of network services was in the hands of state governments. However, the state governments were also the owners of the networks thus creating a conflict of interest. State governments would slash budgets for infrastructure maintenance in order to bolster financial results. This situation has brought us to the point where degraded or neglected networks are hampering electricity delivery to residential and business consumers alike.

The regulation of network services has now been passed along to the independent Australian Energy Regulator. Free of local government interest and influence, they are to include in their duties much needed infrastructure maintenance. Of course, the consuming public is now dealing with the shock of significant increases in order to better preserve their overall electricity services.