A MEMBER of the expert group advising the federal government on energy policy has contradicted the Prime Minister's assertion that the states are to blame for skyrocketing energy prices as she released data showing the stark impact of ''energy poverty'' in Australia.
Lynne Chester, an energy and regulatory expert at the University of Sydney, said the states operated under rules agreed by the federal and state governments for the regulation of electricity pricing.
''It's all very well for the Prime Minister to say 'you've been doing it wrong'. No they haven't. They've been doing it within the rules,'' Dr Chester said.
She said it was ''disingenuous'' of Julia Gillard to blame the states because they owned the electricity networks.
The states and Commonwealth, through the Council of Australian Governments and the Ministerial Council on Energy, had set the rules in the late 1990s that required the Australian Energy Regulator to ensure electricity prices reflected the cost of supply, and recovered the cost of investment in transmission and distribution.
"It's the rules that need fixing; the energy regulator needs the power to be able to scrutinise and reject overinflated bids by companies for price rises,'' said Dr Chester, who is an independent member of the reference group that advised the government on its forthcoming white paper on energy policy.
She said millions of Australian households were suffering as a result of the approach to pricing electricity that put the emphasis on efficient markets.
''Australia is hailed around the world for restructuring the electricity sector and getting the market right for electricity pricing but this pricing approach is having an incredibly adverse impact on the living standards of 3½ million Australian households,'' she said.
A former senior executive with EnergyAustralia and Sydney Water, Dr Chester said the issue was not privatisation but an approach to pricing that ignored the massive social impact of electricity prices, especially on the poorest families.
"We need to stop the blame game and work out a national approach to deal with those suffering extreme hardship," she said. Current measures were inadequate and inconsistent across Australia.
In a paper with Alan Morris, to be published in the Australian Journal of Social Issues, Dr Chester says structural change that included the break-up of monopolies, and consumer choice of suppliers, had spawned an increase in household electricity prices well above inflation and income trends. NSW households experienced an 80 per cent increase in electricity prices between 2007 and 2012, and Queensland, South Australia, Tasmania and WA experienced increases of about 60 per cent. Further increases of 33 to 42 per cent are expected over the next two years.
Official figures show nearly 25 per cent of households, the poorest group, spent on average 7 per cent of their disposable income on energy costs in 2009-10.
This was nearly three times the proportion spent by the wealthiest households.
However, Dr Chester's continuing research indicates these figures understate the problem. Households on annual disposable incomes of about $25,000 spent ''well in excess of 10 per cent and in some cases over 15 per cent'', she said.
In Europe it was accepted that households that needed to spend 10 per cent of income on energy suffered ''fuel'' or ''energy'' poverty. While Australians did not suffer Europe's freezing winters they had the highest rates of ownership of refrigerators and air-conditioners in the OECD.