Origin Energy Limited (Origin) today announced that it intends to contest the Queensland Competition Authority (QCA) Final Determination released yesterday on regulated retail electricity prices for the 2012-13 financial year.

The Determination understates the wholesale cost of supplying electricity to customers. The wholesale energy cost allowance is based only on short-term market contract costs, including spot purchases and an allowance for financial hedging - which has been understated. It also does not allow for the cost of investment in generation, either directly or through long-term contracts.

Origin's Managing Director Grant King said: "If left unchanged, the decision will restrict Origin's ability to appropriately recover approximately $60 million from the Queensland market for the cost of wholesale energy.

"More importantly, the decision is disappointing in that the wholesale cost allowance does not reflect both the short-term and long-term costs of providing sufficient generation capacity to the Queensland market.

"This undermines confidence in investing in new generation in Queensland at a time when the State is experiencing significant growth in demand, in particular driven by the booming mining and resources sector. It thereby intensifies upward price pressure for future tariffs, and also in the interim discourages retail market competition and reduces customer choice," Mr King said.

Origin continues to seek a transparent framework for setting retail electricity tariffs with the goal of promoting an efficient and competitive energy market in Queensland that accurately and fully reflects the actual cost of supply.

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