Energy price deregulation on the horizon

The Australian Energy Market Commission (AEMC) has begun examining the effectiveness of retail competition in electricity and gas markets.

A similar review was undertaken in Victoria before energy prices were deregulated in that state.

Under an agreement between all Australian States and Territories, governments agree to remove price deregulation once the AEMC has found there is effective competition. NSW currently has a regulated price for electricity and gas, set each year by the Independent Pricing and Regulatory Tribunal (IPART).

Energy retailers can offer their own prices as part of ‘market contracts’, but consumers currently retain the option to pay the regulated price. If the AEMC finds competition is effective, the NSW Government has the option to remove price regulation.

In its submission to the review, PIAC raised some concerns about competition in NSW energy markets.

Based on PIAC’s research report, Choice? What Choice?, consumers in some regional centres experience much lower levels of competition than their counterparts in metropolitan Sydney.

PIAC argued that if prices were deregulated, a targeted and effective public information campaign would be needed to educate consumers about how to operate effectively in the de-regulated market. It is important that such a campaign reach all consumers, including those from non-English speaking backgrounds and without internet access.

PIAC also raised concerns about the impact of late payment fees on retail competition. PIAC would like to see late fees banned if prices are deregulated in NSW. PIAC also argued that competition in NSW gas markets is much weaker than in electricity markets.

PIAC gave a presentation at a public forum as part of the review. A copy of that presentation is available here. PIAC’s submission to the process is available here.


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