We could have been celebrating a price drop

NSW households may soon be asked to pay electricity retailers an allowance of between $52 and $84 per year to retain and acquire customers in NSW, if IPART’s draft prices are adopted in July.

By loading up the regulated retail price of electricity with the costs of marketing and discounting, the Independent Pricing and Regulatory Tribunal (IPART) is asking all NSW customers to pay retailers to compete.

‘Without these costs, consumers could have been celebrating a price drop’, said Carolyn Hodge, senior policy officer at the Public Interest Advocacy Centre (PIAC).

According to IPART, a profitable retail sector will encourage competition and inevitably provide consumer protection. ‘PIAC questions the logic of hiking prices up solely to encourage the possibility of driving them back down at some time in the future,’ Ms Hodge said.

Discounts are commonly offered against the regulated price. ‘PIAC questions whether consumers are really benefiting from competition when unnecessary costs are being loaded onto electricity prices.’

‘PIAC understands that retailers need to be economically viable. While it’s reasonable that IPART’s processes ensure this, it is unreasonable to load consumers with unnecessary costs,’ said Ms Hodge.

NSW saw over 23,000 electricity disconnections last year due to an inability to pay. People who are struggling just want to keep the lights on. NSW needs a competitive electricity market that delivers fair prices for consumers.

PIAC believes the regulated retail electricity price is an important safe-haven for people who may be disadvantaged by the terms and conditions of market offers, such as discounts that lose their value if people don’t pay on time, every time.

PIAC calls on the NSW Government to reject this proposal and save people up to $84 per year. In a time of tight Government and household budgets, this is something the Government can do to help which will not impact on the NSW Budget.

‘It’s important to set a regulated price that is in consumers’ real interests. If and when the decision to deregulate NSW electricity prices is made, the regulated price will become the standard that other offers are compared to. Let’s not start with higher prices than we need to,’ said Ms Hodge.

Related content: Report reveals impact of electricity disconnections

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