QUEENSLAND'S government is choking competition in the retail electricity market by misdirecting a key subsidy, the former head of the state's competition watchdog says.
Brian Parmenter, who used to head the Queensland Competition Authority, says the government currently pays a community service obligation (CSO) subsidy to ensure regional consumers don't pay significantly more for electricity than those in the southeast.
But he says only Ergon Retail receives the subsidy, which it uses to pay Ergon Network for the use of its regional distribution networks.
"No other retailers can compete because none can access the CSO," Mr Parmenter wrote in the Australian Financial Review on Thursday.
A Department of Energy spokesman said Ergon doesn't have sole retail rights in any area but confirmed that it was the only company receiving the subsidy.
"It is a commercial decision by retailers as to which customers and market segments they are prepared to make offers to," he told AAP.
"There is no legislative impediment to retailers providing their services to customers in regional Queensland."
But Mr Parmenter argues the subsidy should be paid to Ergon Network, instead of Ergon Retail, so that all retailers can access its networks.
"Then retail competition might have a chance," he said.
Mr Parmenter believes the policy reflects extreme risk-aversion by a government worried the electorate may think the uniform tariff policy is threatened.
"If I thought I might lose an election tomorrow, I might take the risk-averse view," he said.
"But if I knew it would take me at least five years to lose, I hope I would be bolder."
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