The Australian Energy Regulator (AER) is to launch an investigation into electricity networks and regulated gas suppliers to find out whether they are gouging consumers to cover their corporate tax liabilities.
The review follows a request by the Federal Government.
The AER said that as part of the revenue determination process, regulated networks receive an allowance so they can cover their corporate tax liabilities, which is passed on to consumers at a cost of about $600 million a year.
It said an Australian Taxation Office (ATO) analysis of tax data between 2013 and 2016 revealed a discrepancy between the tax allowances the AER previously set for network businesses and the amount the businesses actually paid.
Minister for the Environment and Energy, Josh Frydenberg said it was unacceptable for consumers to be charged for corporate tax liabilities that were not actually incurred.
“The ATO was limited in the advice it could provide due to tax privacy laws so the Government has asked the AER to investigate further,” Mr Frydenberg said.
“If necessary, the AER will be able to exercise its information gathering powers to obtain any material it needs to complete the review.”
He said the AER would review how it modelled tax costs and make any changes required before the next round of revenue determinations, which are due in April 2019.
“It will also provide recommendations on any changes required to the national energy rules,” Mr Frydenberg said.
He said an initial report from the AER was expected in the middle of the year, with a final report by December.
