Tasmania's energy retailer is hitting out at claims that it is taking an extra $811 from every Tasmanian household as a result of charging consumers for network costs that do not exist.
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A report by the Institute for Energy, Economics and Financial Analysis, which is based in New York but has several staff focused on Australian matters, found that energy retailers across Australia had overcharged power consumers by $10 billion since 2014.
Using Australian Energy Regulator (AER) data from July this year, the report found that network retailers were overestimating the building, operating and maintenance costs to run their businesses but then still charging consumers for these costs.
This led to a "supernormal profit" being passed on to shareholders, which was 67 per cent higher than the normal expected profit.
Labor have jumped on the report, calling it a "bombshell" that alleges Tasmanians have been ripped off millions of dollars in power bills
TasNetworks chief executive Sean McGoldrick said allegations of the network making unfair profits were ridiculous.
"It's wrong to accuse TasNetworks when we don't even set our own charges."
The report found that TasNetworks had received a $231 million supernormal profit since 2014, but stated that due to government ownership of the state's electricity network, "supernormal profits are, in effect, returned to taxpayers".
Labor deputy leader Anita Dow said Tasmanians deserved answers to the report and its claims that the $231 million TasNetworks superprofit is inconsistent with national electricity laws and the Australian Economic Regulator's objective of ensuring consumers pay no more than necessary for power.
"This extraordinary rip off equates to $811 per household, and follows years of warnings from Labor that the Liberal Government is using our energy businesses as their personal ATM," she said.
TasNetworks chief executive Sean McGoldrick said the report distorts how electricity prices are set.
He said network charges make up about 40 per cent of a typical Tasmanian power bill.
"In recent years, TasNetworks has actually managed to reduce network charges for Tasmanians, and our recent profits have been smaller than usual. It makes a mockery of this allegation," Mr McGoldrick said.
"[It] recently managed to reduce network charges over several consecutive years, most recently by 5.2 per cent in 2020-21. That brought network charges down to the same level, in real terms, as they were in 2009-10."
Energy Minister Guy Barnett criticised Labor for trying to grab cheap headlines.
"Labor continues to show it has nothing to offer Tasmanians apart from scaremongering and trying to misrepresent the clear facts around energy and cost of living."
Ultimately the report argued that economic regulation had failed, and called for improved reporting and monitoring to ensure network revenues matched costs.
Australian Economic Regulator chair Claire Savage said claims that its regulatory framework provides electricity networks with supernormal profits were concerning.
"Our regulatory framework is based on enabling networks to earn an adequate rate of return if they produce efficiently," Ms Savage said.
"Businesses can earn returns above the rate of return set by the regulator if they outperform the expenditure forecasts set by the regulator, or they provide demonstrated benefits to consumers."
She said AER was consistently assessing how the regulatory regime is performing in delivering outcomes that are in the long-term interest of consumers.
Energy Networks Australia chief executive Andrew Dillon said customers are better off with incentive-based regulation, which is what the report seemed to attack.
"Revenues are lower when regulators regulate revenues, not profits," Mr Dillon said.
"Incentive based regulation encourages networks to innovate and deliver value-fo-money service, with these savings passed on to the customer."
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