Price regulation a second rate result for consumers

The Government’s proposal to re-regulate electricity prices is rushed and does not have the support of the industry, affected States and Territories, nor the Australian Energy Market Commission, the energy industry said today.

The Australian Energy Council’s Chief Executive, Sarah McNamara, said the Draft Decision released by the Australian Energy Regulator highlighted that, even amongst the around 14 per cent of the market currently on standing offer tariffs, the benefits will vary greatly. Some customers may pay more than they do at the moment, others will see their prices hold.

"For the 86 per cent of customers who are already on a cheaper market deal, today’s announcement will not lower prices. However, the Government’s own adviser, the AEMC, has warned of a likely increase in the price of some of the cheap deals in the market in the future.

“When governments choose to set prices in any market serious consequences can occur. Federally imposed price regulation also flies in the face of the agreement reached at the last COAG Energy Council meeting. Price regulation is usually a decision made at a State level.  In a complex market, we need to be careful that the majority of customers will benefit from a reform and that vulnerable customers are protected. That work has not been done,” Ms McNamara said.

“We also know why energy prices are high.  They are high because of cost pressures across the supply chain, and because we are an industry without a guiding policy framework.  Price regulation cannot overcome those challenges.

“If the Government is keen to regulate prices in the energy market, we encourage it to take the time to do it properly, and with the cooperation of the States so customers do not suffer detriment.  We need time to prepare for this change and educate customers.  This is a rushed and sub-optimal response which does not address the cost issues in the energy market.”

About the Australian Energy Council

The Council represents 23 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.