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state political reporter Adam Langenberg

Power price rises on mainland spark concern for Tasmanians hit hard by cost of living pressures

Why do Tasmanian power bills keep going up when the state produces 100 per cent renewable energy?

A huge increase in Victoria's power prices has stoked fears that a dramatic price rise could also be on the way in Tasmania. 

Victoria's Essential Services Commission released its default offer on Wednesday, unveiling a 30 per cent price rise for residential customers, and a 31 per cent rise for small businesses.

It followed rises of between 19 and 23 per cent in South Australia, New South Wales and south-east Queensland, with Tasmanian Labor's energy spokesman Dean Winter concerned a similar rise could flow through to Tasmania. 

"If this is replicated across Tasmania, a 20 per cent increase would be around $500 to the average household bill for the next financial year," he said. 

"That's obviously a huge concern for households who are already struggling with increased grocery prices, interest rates, the cost of petrol."

But energy analyst Marc White said the difference between how the Tasmanian and interstate regulators determine the wholesale price — with Tasmania's approach based on quarterly pricing data — meant he was hopeful there would be a smaller rise of between 5 and 15 per cent in Tasmania. 

The regulator acknowledged the prices rises "will be tough on Victorian energy consumers" — with some fearful of what is in store for Tasmanians. (flickr: Brian Henry Thompson)

Tasmania's wholesale price, which forms part of what the Tasmanian Economic Regulator considers when it hands down a pricing determination each year, is largely determined by Victoria's wholesale price, plus inflows into Tasmania's hydro system. 

"In Victoria we're looking at a doubling of the wholesale price and hopefully in Tasmania the economic regulator's process builds that up over time," Mr White said.

"When we looked at the Victorian results, they're based on a wholesale price going from about 8 cents per kilowatt hour to 15 cents, we're hopeful in Tasmania that will be more like 8 cents going to perhaps 9 or 10 cents.

"I remain hopeful that we're looking at more modest rises than what the other states have seen."

The Tasmanian regulator is set to hand down a pricing determination for the next financial year in late June. 

The Victorian draft decision would see the average annual bill for customers on the default offer increase to $1,829, while the average small business bill would climb to $7,358 a year.

In its decision, the regulator said it did not propose the increases lightly and acknowledged they "will be tough on Victorian energy consumers".

"While our draft decision will lead to higher prices in the short term, setting the Victorian Default Offer prices at levels that reflect retailers' efficient costs will lead to lower prices in the medium to long term," the commission said. 

Tasmania's premier said power price rise announcements were "really only relevant to mainland states and not Tasmania". (ABC News: Chris Gillette)

It urged consumers concerned about rising price to take advantage of government support programs, with a new round of $250 electricity relief payments to Victorian households set to open on March 24. 

About 400,000 Victorian households and 55,000 small business customers are on the default offer — also called a standing offer — while a vast majority of Tasmanian Aurora Energy customers are signed up to them.

Australian Energy Regulator chair Clair Savage told RN Breakfast on Wednesday that price rises in South Australia, New South Wales and south-east Queensland would likely have been between 40 and 50 per cent without government intervention to cap prices in the domestic gas and coal markets late last year. 

Tasmanian Labor has called on the state government to cap prices for Tasmanian households. (Pixabay)

'Not relevant to Tasmania'

Premier Jeremy Rockliff said announcements interstate were "really only relevant to mainland states and not Tasmania".

"I'm interested in price determinations across the nation, but they are not relevant to Tasmania at this time," he said.

"We have our own regulator that sets the prices and so I do not want others in the community to necessarily frighten Tasmanians."

Mr Winter called on the Tasmanian government to reintroduce its policy to limit the amount power prices could increase by.

"With prices continuing to go up the government should do what it promised and that was to cap prices for Tasmanian households," he said.

"Tasmanian Labor has stuck with its position, we believe there should be a price cap, in fact we believe there should have been a price cap last year when we proposed legislation that would have capped power price increases at 2.5 per cent."

'Devastating blow' to budgets

Tasmanian Council of Social Services acting chief executive Charlie Burton said household budgets were already stretched.

"We're extremely concerned that any further increases to the cost of energy will be a devastating blow to people on the lowest incomes who are already at breaking point," Dr Burton said.

"They do not have any room left in their budgets and will cut back further on essentials such as food, energy, transport and health care, placing increased demand on emergency relief and community services."

Dr Burton called on the Tasmanian government to again cap power prices and immediately roll out $33 million it has put aside for the federal government's energy bill relief program, which is still being negotiated.

Mr Rockliff said the government would offer support to Tasmanians affected by rising power bills and cost of living increases but ruled out capping price increases. 

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