Essential Energy boss gets a 17 per cent pay rise

Wage increase: Essential Energy CEO John Cleland enjoyed a 17 per cent wage increase.

Wage increase: Essential Energy CEO John Cleland enjoyed a 17 per cent wage increase.

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Labor's shadow energy minister says a 17 per cent pay hike for Essential Energy's chief executive officer John Cleland is 'out of step'.

Adam Searle says the energy giant is wholly owned by the state government and the wage increase comes at a time when households and small businesses are suffering from record high electricity bills.

Mr Cleland’s total pay packet rocketed to $882,076 a year - an increase of $117,723.

"Essential Energy is 100 per cent-owned by the NSW Government and distributes electricity to 800,000 customers across regional New South Wales," Mr Searle said.

"In the last year Essential Energy also cut hundreds of jobs.

"The massive 17 per cent pay hike is out of step with the movement of wages and salaries across the economies - which are almost stagnant.

"It is also breaches the Government’s own 2.5 per cent wages cap which applies to teachers, nurses, police, ambulance officers and all other public servants."

But Mr Cleland said Essential Energy is transforming its business to achieve its strategic objectives of continuously improving safety, operating at best industry practice for efficiency, delivering real reductions in customers’ distribution network charges and generating a satisfactory return on capital employed.

"While Essential Energy recorded a profit after tax in 2016-17, the business's return on capital was below that set by the Australian Energy Regulator (AER), as the business realigned its costs," he said.

Giving a huge pay rise to an executive who has slashed the workforce and presided over rising prices for people doing it tough in the bush, is out of step with community expectations

Adam Searle

"Coming off a negative profit in the previous year, the 2016-17 profit result was driven by ongoing efficiency and productivity improvements.

"Since 2013, Essential Energy has delivered three consecutive years of network charge reductions for customers while sustaining and improving supply reliability across the network. 

A recent report by IPART found that 'NSW consumers are paying around the same prices for electricity today as they did prior to retail price deregulation in 2014'," he said.

Essential Energy appointed Mr Cleland in July 2016 with remuneration based on independent market analysis and consistent with the NSW Wages Policy.

Under the regulatory framework, Essential Energy operates under a revenue cap set by the AER. In 2016-17, revenue and network tariffs were higher than forecast due to electricity consumption being marginally higher than expected.

Essential Energy and the AER have agreed to an undertaking for 2017-19 to limit network changes to the underlying rate of inflation while delivering safe and reliable services to customers and enabling the business to recover its efficient costs.

Mr Searle said Essential Energy has spent the last two years fighting an expensive legal action against the independent price regulator which wanted to cut prices.

“Giving a huge pay rise to an executive who has slashed the workforce and presided over rising prices for people doing it tough in the bush, is out of step with community expectations," he said.