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High energy prices raise concerns once again

A preliminary report released by the Australian Competition and Consumers Commission (ACCC) has highlighted serious failings of the national energy market, which is leading to serious problems with affordability for consumers and businesses.

Vulnerable consumers face difficulties with the retail electricity market (Source: Shutterstock)
Vulnerable consumers face difficulties with the retail electricity market (Source: Shutterstock)

The Retail Electricity Pricing Inquiry preliminary report began in April and received over 150 submissions as well as hearing directly from consumers, businesses and other stakeholders at public forums in Adelaide, Brisbane, Melbourne, Sydney and Townsville.

From the gathered information, Chairman of the ACCC Rod Sims says the inquiry heard many examples of difficulties that consumer and small businesses face in engaging with the retail electricity market and the particular difficulties faced by vulnerable consumers.

“It’s no great secret that Australia has an electricity affordability problem,” he says.

“What’s clear from our report is that price increases over the past ten years are putting Australian businesses and consumers under unacceptable pressure.

“Consumers have been faced with increasing pressure to their household budgets as electricity prices have skyrocketed in recent years – residential prices have increased by 63 percent on top of inflation since 2007-08.”

Mr Sims also adds that consumers and businesses are faced with a multitude of complex offers that cannot be compared easily.

“There is little awareness of the tools available to help consumers make informed choices or seek assistance if they are struggling to pay their electricity bills,” he says.

“Many of these issues arise from unnecessarily complex and confusing behaviour by electricity retailers, and in some cases this appears to be designed to circumvent existing regulation.”

National Seniors Chief Advocate Ian Henschke has weighed in on the findings and says the ACCC’s conclusion that behaviour of retailers was ‘complex, confusing and potentially designed to circumvent legislation’ would come as ‘no surprise to older consumers’.

Mr Sims further explains that when it comes to the drivers of Australia’s electricity affordability problem, there is much ill informed commentary.

The report revealed that the main cause of higher customer bills was the significant increase in network costs for all states other than South Australia where generation costs represented the highest increase.

“The ACCC believe you cannot address the problem unless you have a clear idea about what caused it,” he says.

“Armed with the clear findings on the causes of the problem, the ACCC will now focus on making recommendations that will improve electricity affordability across the National Electricity Market.”

The ACCC will now consider steps that can be taken to reduce complexity and improve consumers’ ability to engage with the retail electricity market and switch suppliers.

Recommendations for reform will be released with their final report, which will be provided to the Treasurer in June 2018.

A number of recommendations that could be implemented immediately by Government were also included in the ACCC’s preliminary report. This comes in addition to the steps the Federal Government has already taken towards improving electricity affordability.

The recommendations include:

  • Provide additional resourcing to the AER’s Energy Made Easy price comparison website as a tool to assist consumers in comparing energy offers
  • State and territory governments should review concessions policy to ensure that consumers are aware of their entitlements and that concessions are well targeted and structured to benefit those most in need
  • Improvements to the AER’s ability to effectively investigate possible breaches of existing regulation, for example the power to require individuals to appear before it and give evidence. Consideration should also be given to the adequacy of existing infringement notices and civil pecuniary penalties to deter market participants from breaching existing regulations.

Mr Henschke says National Seniors agree with the ACCC that state and territory governments around Australia should review concessions.

“Older consumers should have access to the same level of concessions for essential services regardless of where they live,” he says.

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