States back independent watchdog on energy price

NSW, Queensland and Victoria are mounting a united fight back against the ''power war'' being waged by the Prime Minister, Julia Gillard, presenting their own reform plan to slow electricity price rises.

The states are seeking to turn the tables on Ms Gillard, who last month accused them of price gouging and threatened to use the ''big stick'' of federal regulation at the December Council of Australian Governments meeting to stop more power price rises stemming from state government price gouging and over-investment in electricity networks.

At a special meeting of energy ministers today, the NSW Energy Minister, Chris Hartcher, and his two eastern state counterparts will argue that they are the defenders of electricity consumers, agreeing to a package of reforms negotiated with the Resources Minister, Martin Ferguson, and pushing for further changes - including full independence for the federal Australian Energy Regulator.

Their argument is bolstered by Mr Ferguson's remarks to the Herald last week - which contrasted sharply with Ms Gillard's stance - when he said conservative states were not responsible for power price rises and did not need to be threatened in a quest for ''cheap'' headlines.

The state ministers argue that their energy companies have been shackled to decisions by the Australian Energy Regulator, which they propose should become fully independent under revamped rules. ''Ironically, when the Prime Minister speaks about network overspending by state network business, she doesn't understand that it's her own Commonwealth body that regulates their capital expenditure,'' Mr Hartcher said.

The Victorian Energy Minister, Michael O'Brien, said the strength and capacity of the energy regulator had a direct impact on household power bills. ''Australians need an independent expert watchdog to protect consumer interests,'' he said.

The states are wary of a growing push for a federal takeover of energy regulation, proposed in a private members bill by independent MP Rob Oakeshott and backed by some in federal Labor.

Ms Gillard claimed state governments had ''been increasing their revenue at the expense of the family electricity bill'', that states ''can, and should, do more to cut future price rises''.

But the states insist the problem is the Australian Energy Regulator, which they say is not operating in the long term interest of consumers. They say the states, the industry and ''federal agencies'' all understand the real problem, but the Prime Minister does not.

The Queensland Energy Minister, Mark McArdle, said the state's idea for the Australian Energy Regulator to be independent and no longer part of the Australian Competition and Consumer Commission had ''wide acceptance from all sections of industry and is only being blocked by the Commonwealth''.

He said the idea would deliver exactly what ''the Prime Minister says she wants''.

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