Gillard moves to reduce the cost of electricity

THE rising costs on household power bills could be cut by up to $250 a year, under a plan Prime Minister Julia Gillard will bring to the states during Council of Australian Governments meetings this Friday.

Ms Gillard's plan comes after a Senate inquiry, a major energy market review by the Australian Energy Market Commission and a Productivity Commission inquiry into electricity costs.

While the details of the package of reforms were yet to be released, Ms Gillard said she wanted to stop state governments "gold plating" the electricity transmission networks, and tighten regulations.

The package that she will show state Premiers on Friday includes the creation of two new consumer bodies on power prices and an independent "reliability standards" regulator.

It would also see up to $3 billion in unnecessary spending on infrastructure upgrades to cater for four days a year of peak demand cut.

Ms Gillard said the reforms were about addressing the real drivers of high power prices, and aimed to give consumers a better say in negotiating electricity contractors.

"We can make a difference; the Productivity Commission said this all adds up to difference of around $250 a year for a family. I'm determined to make the difference," she told Meet the Press.

But state government fears of a mass sell-off of government-owned assets were un-founded.

She said the reforms did not involve such a privatisation, despite it being a recommendation in the government's own Energy White Paper last month.

"This is about changing, going through from the top - at the moment, a perverse incentive to gold-plate, more investment in poles and wires - changing that so these things are set more independently," she said.

The proposed reforms were welcomed by various groups including consumer advocate CHOICE, welfare agency the Brotherhood of St Laurence.

But Opposition Climate Action spokesman Greg Hunt said the government should remove the carbon tax to combat power price rises.

ON THE COAG AGENDA:

  • Stop over-investment in networks
  • Set reliability standards independently
  • Result in a stronger regulator of the industry
  • See the creation of two new consumer bodies
  • Set an agenda for flexibility on pricing

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