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Despite PM’s plans, bills to rise

Households in NSW face another rise in energy bills after EnergyAustralia announced plans to increase prices by up to 10.5% over the next three years.

EnergyAustralia plans to increase prices by 4.5% from July 2013, 3% from July 2014 and a further 3% in July 2015.

The news comes just a day after the Prime Minister, Julia Gillard, announced plans that could see up to $250 shaved off the annual household electricity bill. AGL Energy (ASX: AGK) has also announced plans to increase prices by 10.4% from mid next year.

Related: Complaints spike as energy prices soar

The proposed changes follow a 20% increase implemented from July this year, sparked, according to power companies, by the need to upgrade the electricity network to cope with peak power periods. That has lead to energy suppliers being accused by governments of ‘gold plating’, or overspending on their network upgrades. The suppliers have countered by saying that state governments have neglected our energy networks for decades. $17 billion is projected to be spent upgrading networks from 2009 to 2014, despite households reducing their usage due to the rising prices.

Companies like AGL, Origin Energy (ASX: ORG), ERM Power (ASX: EPW) and Australian Power and Gas Company (ASX: APK) have also raised prices due to the introduction of the carbon tax. The introduction of solar rebates for solar generated electricity is also being blamed for price rises, with an explosion of households taking up the offers, pushing the costs onto those who have not installed solar panels.

The average household bill has risen 80% over the past five years, and is expected to reach $2,230 this year, according to the Australian Financial Review.

The Foolish bottom line

Some sectors of the media have suggested the easiest way to reduce power bills would be to drop the carbon tax. It seems to me that the real issue was the privatisation of energy assets. State and federal governments appear to have lost real control over the energy industry, and consumers are bearing the brunt of that mistake.

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Motley Fool writer/analyst Mike King doesn’t own shares in any company mentioned. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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