What is cost reflective pricing?

Most customers of Horizon Power pay a tariff that is much lower than the actual cost of purchasing or generating, distributing and retailing electricity. The difference between the tariffs most customers pay and the actual cost is subsidised by the State Government. A cost reflective tariff is one which reflects the true cost of supplying electricity and removes the reliance on State Government subsidies to cover the variance between the current tariff and the true cost of supply of electricity. The State Government sets the prices and Horizon Power is required to implement and communicate them.

Some large commercial customers and customers on the N2 and P2 tariffs pay cost reflective rates. The N2 tariff is available to State, Commonwealth and Foreign Government instrumentalities that are supplied from a regional Non-Interconnected System (NIS) and the P2 tariff is the equivalent for customers supplied through the North West Interconnected System (NWIS).

Examples of the bodies cost reflective tariffs apply to include any:

• Government department;
• statutory business enterprise, such as the Water Corporation and Main Roads;
• statutory body corporate, such as public universities and hospitals;
• statutory authority or commission, such as the Port Hedland Port Authority, Pilbara Development Commission and Australian Competition and Consumer Commission; and
• statutory establishments, such as government schools.

Local councils, shires or cities are not on cost reflective tariffs.