Aurora sale collapses causing fear of Power Price Increase

The Government has discarded plans to sell Aurora Energy’s customer base causing Tasmania’s main welfare lobby group concern that power prices will increase. Aurora Energy a state-owned company will now lose its retail monopoly next July because the government abandoned plans to sell due to not attracting high enough bids. In the past decade power prices have doubled. With the climate in Tasmania being so cold compared to other parts of Australia, Tasmanian households use more electricity on heating therefore using more of their income to pay electricity bills. There are fears the situation will now get worse which will hurt even more those people struggling to pay their electricity bills.

It is believed that the change next July for Aurora will be tough according to Cameron O’Reilly from the National Energy Retailers Association. He also said “the history of retail competition is that it is almost certainly easier to be the challenger rather than the incumbent.”

Energy Consultant Marc White is uncertain of its capability to adjust to a mass market.  He is concerned about how Aurora can become market ready moving from 6,000 contestable customers to 240,000 contestable customers in such a short time frame. Some private energy retailers may still want to operate in Tasmania, energy industry lobbyist Andrew Dillon says. Making money from selling the retailers was not the only intention of the reforms, it also aimed to deliver a competitive market for Tasmanian’s.

Mr Dillon said “if the structures with the Hydro side can work there is no reason this can’t work because even though there is no guarantee there is certainly a potential for it to still happen.”

The Government has been told by Aurora’s board that the business can remain viable in an open market. Kim Booth, Green’s Energy spokesman says he is doubtful of the promise of lower power prices.  He believes that at the end of the day the Mum and Dad power users will be paying more for their electricity than they should be. The Launceston City Mission has given assistance to more than 100 households to pay their bills in the last 2 months.

There is concern that struggling Tasmanian s will be no better off. Tony Reidy from the Tasmanian Council of Social Service states that given the fact that Tasmania has the highest unemployment, the lowest income, the highest underemployment and the largest reliance in the state on a per capita basis on Commonwealth benefits.  This means that people will not be able to afford increases in electricity costs.

The Government’s energy reforms were destined to fail from the beginning, the Tasmanian Chamber of Commerce and Industry has said.  These plans would have been difficult to accomplish, the Chamber’s Michael Bailey said.

Mr Bailey also said “I would never support the sale of the Hydro assets in Tasmania and I believe that it is very hard to find a buyer for a market of only 500,000 people, only able to buy energy from one supplier.”

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