LNG partly to blame for power price increase

THE average regional Queensland household might experience a 0.6% increase - or $8 a year - in their electricity bill and the growth in the LNG industry has been blamed for part of the rise.

A draft decision was released on Wednesday from the Queensland Competition Authority (QCA) into the regulated retail electricity prices for regional Queensland for 2016-17.

Based on an expert analysis, it is proposed the yearly power bill for 600,000 residents in Queensland would rise from $1457 to $1465 on average (including GST).

Small businesses would expect a higher rise of about 9.3%, or $197 a year, with the average bill going from $2113 to $2310.

Annual bills for large business will increase by between 10.2% and 10.6%, the draft determination outlines.

QCA chair Professor Roy Green said the main reason for the rise was because of an increase in energy costs.

"Queensland as well as the rest of the economy is shifting over to world prices for gas and depending on what the world is prepared to pay for LNG, that's going to flow on to us because historically prices for gas have been kept much lower than world prices," he said.

"We haven't been so connected into the global system."

Prof Green said there was a potential for power bills to become more expensive because of this.

In its submission to the QCA earlier this year, Bundaberg Regional Irrigators Group said rapidly rising electricity prices were having a severe impact on the costs for members and irrigated agriculture.

"Right now, rural and regional Queensland is in crisis as a result of electricity prices," their submission from company secretary Dale Holliss said.

Canegrowers chief executive Dan Galligan also made a submission to the QCA earlier this year, saying the sharp increases in electricity prices in the past years were unsustainable.

Prof Green said these submissions were analysed and considered when drafting the new electricity pricing.

"There are very favourable tariffs operating for irrigators and subsidised even more greatly than the average customer, so I can't imagine there would be too much impact as far as they're concerned, especially given the subsidised arrangements."

Wednesday's draft QCA decision came after Queensland energy and water supply minister Mark Bailey asked the authority to set regulated retail electricity prices for regional Queensland for the 2016-17 financial year.

To ensure electricity prices for those living in south-east Queensland and in regional Queensland are in line with each other, the state government pays a subsidy to the only electricity supplier in regional areas - Ergon Energy.

Last year the QCA determined a 0.5% decrease for the average household, or about $8, for the 2015-16 financial year.

Before it makes a final determination, it is expected the QCA will hold workshops across the state, including at Brisbane, Bundaberg, Mackay, Cairns, Mount Isa, Toowoomba and Townsville from April this year, depending on the level of stakeholder interest. - ARM NEWSDESK