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Householders face double whammy

Householders face double whammy


Households face double whammy – a ‘price spike’ because regulator recently lost a court case and also missing out on billions from the sale of public assets. 

When top shelf investment players buy assets from the government in backroom deals there is risk that money could be left on the table. These are the smartest guys in town, not just the room. They see quality assets and strong growth – why else would they buy?

After a Federal Court decision today – it is now obvious that the NSW government left money on the table which will now expose the NSW Government to accusations it has failed to ensure the best value for taxpayers.

It is probably worth an extra $5 billion that could have gone to schools, hospitals and infrastructure. It is not that something dodgy happened in the backroom – it is that the politicians were outsmarted by the “players”.

The NSW poles & wires companies Ausgrid, Endeavour Energy and Essential have won a court case against the regulator.

This is politically embarrassing for the NSW government and will hurt them in voter land because electricity prices should go up now. The cost of sending electricity from power stations to households makes up around 40 per cent of the electricity bill, that should see electricity costs rise by $500 per household.

The Federal Court’s decision is worth billions of dollars, some say $5 billion, for the new buyers Australian Super and Macquarie Group of the 51 per cent stakes in former NSW state-owned Ausgrid and Endeavour Energy.

AustralianSuper and IFM Investors purchased Ausgrid for $16.2 billion in a back room deal with the NSW government as part of its privatisation of “poles and wires” in NSW. Ausgrid delivers electricity to more than 1.7 million homes and businesses across Sydney, the Central Coast and the Hunter regions. The deal was done on 1 December 2016 where the NSW Government entered into a partnership with AustralianSuper and IFM Investors to operate the network under a long-term lease.  The current NSW Premier described the sale of Endeavour as an “outstanding” $7.6 billion deal to a Macquarie Group-led consortium. Endeavour which supplies electricity in areas including the Blue Mountains , Illawarra as well as Sydney’s Greater West to 2.4 million people. The Endeavour deal was signed in May 2017.

It is expected that court decision now sets a precedent for poles & wires companies around Australia.

The electricity prices have been increasing about 8% per year over the last 10 years ( Surging energy costs in Australia to hit householders harder than the average 8% increase ) with the latest news expect this to increase at a greater run rate than 8%.

With the increasing pain due to rising electricity prices comes tremendous opportunity to benefit if you are a property investor. Solar for Rentals from Matter allows property investors to sell electricity from solar PV installed on their properties to tenants. The property investor can get amazing returns and this has just gotten better. Learn more at about this great way to increase cash flow.

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