States want more details on power price plan

State and territory leaders are calling for more details before signing up to the Federal Government's plan to cut electricity bills.

Prime Minister Julia Gillard says her reform package will save consumers $250 per year on their power bills.

She is hoping to reach an agreement on the plan at a COAG meeting of state and territory leaders on Friday.

Ms Gillard wants to give more funding to the national energy regulator, and set up new consumer groups to keep power prices down.

Victorian Energy Minister Michael O'Brien says some of the proposals look worthwhile, but the industry watchdog needs more power.

"The Australian Energy Regulator is in a constant battle for resources, both financial and personnel," he said.

New South Wales Minister Katrina Hodkinson says the states are already looking at ways of pushing power prices down.

"I think the best things they could do is abolish the green schemes and abolish the carbon tax," she said.

Ms Gillard is pushing for the roll out of smart meters, but Queensland Energy Minister Mark McArdle is making no commitments.

"I call upon the Prime Minister to release all costings in relation to her claim as to how these prices are going to be driven down and more importantly, when prices will fall," he said.

The Federal Coalition dismissed yesterday's announcement as a stunt, but says the energy sector does need to be deregulated.

'Once in a decade' John Pierce, the chairman of the Australian Energy Market Commission, wants to see the states and Commonwealth agree to changes to the way electricity is priced to allow consumers to get a better deal.

"This Friday's meeting is an opportunity to make some substantial reforms and an opportunity that only comes around almost once a decade," he said.

"Really [it's] about putting the consumers in a position so that they can be better informed about what sort of options are available to them and what sort of decisions they can make in their position, so that in a way that's easy for them to make decisions about how to use electricity." The Prime Minister also has the backing of a prominent think-tank, the Grattan Institute, which has released a report on how to reduce energy prices.

The institute's energy program director, Tony Wood, says the regulator needs to be better equipped to determine the profits of energy network monopolies.

"The regulator does need to be given more direct power and more incentive to tighten up the way in which these businesses have been allowed to charge prices to customers which have probably moved too far in favour of the investor and too far away from the interest of customers," he said.

Consumer savings Mr Wood's report shows fixing the regulatory system could save $2.2 billion a year, which would save the average household about $100.

He praises the Australian Energy Market Commission's recent move to give the regulator more power, but says more must be done.

"The governments together - and this has to be done by both the federal and the state government - they need to hold the regulator accountable for delivering a much better result in the interests, and the long-term interests, of consumers," he said.

The chief executive of the Energy Networks Association, Malcolm Roberts, agrees power bills have risen steeply, but says the increases are justified.

"We look at the different factors that have been pushing up network costs, that's the higher cost of capital thanks to global financial crisis, the need to replace ageing assets, particularly in New South Wales and Queensland, so we're going through a bit of an investment peak," he said.

"There's the continuing need to build extra capacity to meet peak demand.

It's too simplistic to suggest that high network costs reflect just some argument about regulatory failure."

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