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Government steps in to reverse decision on power price hike

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The Queensland government has stepped in to slash an expected increase in regional electricity prices by more than half.

On Wednesday morning, the Queensland Competition Authority announced its final decision on regulated retail electricity prices for regional Queensland.

The decision would have resulted in the annual bill for a typical customer on the main residential tariff increasing by 7.1 per cent, from $1490 to $1595.

The main small business tariff increases would have been 8.2 per cent, from $2449 to $2649.

In response, Treasurer Curtis Pitt said the government would reduce the expected price hike by removing fees for the solar feed-in tariff from Queensland customers' bills.

The move will also benefit customers in south-east Queensland. 

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The government directed Energy Queensland to remove the costs of the solar bonus scheme from network charges until at least 2020.

Energy Minister Mark Bailey has written to retailers in south-east Queensland outlining his expectation that the network cost savings are passed on in full.

The change will not change payments to eligible customers under the state's solar bonus scheme, but means the costs of the scheme will be met by the government instead of consumers over the next three years.

At present costs incurred by distributors paying the feed-in tariff for people with solar panels are recovered through network charges for all customers.

The cost to the government will be $770 million over three years.

Under the government's plan, the household bill in regional Queensland would increase by 3.3 per cent, with a saving of $51 a year compared with the previous expected price hike.

The small business increase would be 4.1 per cent, with a saving of $90.

Mr Pitt said the measure, to be included in the 2017-18 budget in two weeks, was possible due to the higher than expected surplus of $2 billion in the Mid-Year Fiscal and Economic Review.

But Shadow Treasurer Scott Emerson said prices would still go up for regional customers at almost double the inflation rate.

"Curtis Pitt is saying he is going to pay for part of the power price rise that Labor has created by subsidising the increase with taxpayers' money," he said.

Opposition Energy spokesman Michael Hart said government-owned energy companies' wholesale prices were too high.

Earlier on Wednesday, QCA chair Professor Roy Green said the price hike was as a result of substantial increases in wholesale energy costs, which were driven by a projected tightening in the demand-supply balance within the National Electricity Market.

"A number of factors have contributed to this tightening, including the increased demand from electricity-intensive in-field gas compression and associated with the LNG export facilities, and the closure of the Hazelwood power station in Victoria," he said.

Professor Green said he understood affordability was an issue for many customers but the QCA was limited in its ability to consider issues of affordability under the legal framework of setting prices.

Mr Bailey has issued a new pricing delegation for the QCA, with revised prices to be released by June 16. 

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