In yet another classic example of excessive executive compensation while the rest of the nation is reeling from high prices and economic slowdown, officials of power firms in New South Wales are enjoying astronomical pay hikes while residents pay through the nose because of higher electricity rates.
Electricity pylons and wind turbines are silhouetted at the Scottish Power-owned Dun Law West wind farm near Edinburgh, Scotland January 8, 2010.
The Herald Sun reported that the managing director and chief executive of power firm AGL got 85 per cent pay hikes to $6.3 million from $3.4 million in 2011. The boost in compensation was justified by the 11.8 per cent rise of AGL's profit in 2011-12 at $482 million, thanks to the 18 per cent increase in power rates.
Besides AGL, executives of Origin Energy also got salary increases. Managing Director Grant King's total pay package went up by $600,000 to $8.348 million. His actual salary base is $2.5 million but several bonuses due to the strong performance of the energy firm caused his the total compensation package to go up several times over.
Higher energy prices hiked the profit of Origin to $980 million in 2012 from $186 million in 2011. However, the firm also attributed the boost in profit to its purchase of retail businesses owned by the state.
The only one who did not get a pay increase but even a pay cut is Richard McIndoe, managing director of TRUenergy whose salary dipped to $1.4 million from $1.7 million.
Vince Graham, electricity managing director of New South Wales, would only get a maximum pay increase of 2.5 per cent due to cap on public service wages if he could show evidence of productivity gains, said NSW Energy Minister Chris Hartcher.
In August, Mr Fraser even threatened to stop selling electricity to NSW in the state government would set unrealistically low power prices. He justified the rate increases as needed due to higher network charges and the carbon tax.
Largely to be blamed for the higher power bills is the deregulation of power rates in NSW and Victoria, which has caused a surge of complaints about confusing offers from power firms lodged with the Energy and Water Ombudsman in the two Australian states.
Their different offers have led 60,000 households in NSW to switch electricity suppliers by end of July. The situation led the Independent Pricing and Regulatory Tribunal to warn electricity retailers not to raise prices for locked-in customers.
NSW also banned electricity retailers from charging termination fees if customers change the terms of their contracts such as rates. South Australia and Victoria are planning to follow NSW's lead in prohibiting exit fees.
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