Date November 12, 2014 Sean Nicholls – Sydney Morning Herald State Political Editor
Declining electricity use in NSW has led to lower profits for state-owned electricity “poles and wires” companies just as the Baird government prepares to seek a mandate at next year’s election for their partial privatisation.
A report by NSW Auditor-General Grant Hehir reveals after-tax profit for distribution businesses Ausgrid, Endeavour Energy and Essential Energy for 2013-14 was $125 million less than the previous year, while the figure for Transgrid was $9 million lower.
Combined, the companies made an after-tax profit of $1.2 billion, down from $1.3 billion the year before.
Proposed sale: NSW Premier Mike Baird. Photo: Natalie Roberts
Mr Hehir’s report says the lower profit reflected reduced electricity use by customers due to factors including milder weather conditions, energy efficiency measures and more use of solar power.
The result also came despite an underspend on electricity infrastructure by the poles and wires companies of $3.7 billion – 20 per cent less than what was allowed by the national regulator between 2009 and 2013.
But the report said the lower capital expenditure should spell good news for consumers, with electricity prices forecast to fall between 2014 and 2019 as a result.
The report, released on Tuesday, shows that dividends paid to the government by all state-owned electricity companies dropped from $1.16 billion to $872 million in 2013-14. This includes power generators that have since been sold.
However, the tax equivalent payments to the government – designed to ensure the government-owned companies operate on a level playing field against privately-owned competitors – were up from $580 million to $829 million.
This meant that total payments to government remained steady at $1.7 billion.
The government is proposing the sale of 49 per cent of the poles and wires businesses if re-elected in March next year. Essential Energy, which covers regional areas, is not included.
Premier Mike Baird has said the government anticipates about $20 billion from the sale.
This would comprise $13 billion from the transaction, about $2 billion in federal government incentive payments and $5 billion from interest earned after the proceeds are placed in the infrastructure fund, Restart NSW.
The government has said it will use the funds to build a second Sydney Harbour crossing and rapid transit line, extensions to the WestConnex motorway and rural and regional infrastructure projects.
Opposition Leader John Robertson said the report exposed the “folly” of Mr Baird’s privatisation plan, which would “hand over up to $1.7 billion each year to a private company rather than invest that money back into infrastructure and essential services”.
Greens MP John Kaye said the result was “terrible news” for Mr Baird’s proposed sale.
“The great promise of the pots of gold that were supposed to be delivered from poles and wires privatisation is in fact an illusion that is being chipped away by the realities of an industry with declining demand and growing costs,” he said