Energy rip-off: NSW exit fees to be 550% higher than Victoria

Electricity retailers will be allowed to charge contract exit fees $110 higher than in Victoria, under a proposal by the NSW Independent Pricing and Regulatory Tribunal (IPART).  

The Public Interest Advocacy Centre (PIAC) today labelled IPART’s proposal a rip-off and a barrier to competition. PIAC will explain its opposition to IPART today at the Public Forum on Early Termination Fees.

‘It is outrageous that IPART is proposing NSW residents pay up to $130 to terminate a contract, while their Victorian counterparts pay $20 for the same service from the same energy companies,’ said Carolyn Hodge, PIAC’s Senior Policy Officer, Energy and Water.

‘Why should EnergyAustralia be allowed to charge their NSW customers a $130 early termination fee when they can only charge their Victorian customers $20?’ Ms Hodge said. 

‘IPART’s proposal flies in the face of the NSW Government’s commitment to promoting competition in the energy market.

‘Consumers often complain that they spend a lot of time finding a good energy offer only to have the price increased soon after they sign up. 

‘Under IPART’s proposal, if your retailer increases your energy price, you could be faced with Hobson’s choice: either pay more than you bargained for, or you’ll be slugged with a steep exit fee.

‘These high charges will be a barrier to genuine competition, preventing consumers from using the market to find a better offer. It also means companies are likely to compete on fees, rather than prices, which will do little to deliver lower prices to NSW energy consumers,’ said Ms Hodge.

‘Compensating electricity businesses for all the risk of losing a customer distorts the market, and harms consumers. We want to encourage electricity companies to offer prices that are too good to move away from,’ said Edward Santow, PIAC’s Chief Executive Officer.  

PIAC urges IPART to review its calculations, consult with Victoria and revise its proposed maximum early termination fee to $20.

Photo: Flickr/ Theen Moy

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