This submission responds to the NSW Independent Pricing and Regulatory Tribunal (IPART) draft report, ‘Early Termination Fees: Regulating the fees charged for small electricity customers in NSW’ (the Draft Report). The draft report is part of IPART’s process to set a cap on base early termination fees (ETFs) for market retail contracts for electricity and gas (the base ETF cap). The cap excludes the cost of any contract inducements, the prices of which are unregulated. Retailers will be able to set their ETF at any level below the cap, or to have no ETF at all. PIAC argues in this submission that the majority of the costs that IPART has included in its proposed base ETF cap are costs of doing business and are not intrinsically related to the early termination of the contract. Accordingly, PIAC takes the view that these costs should not be included in the base ETF cap. PIAC argues that IPART’s approach will have negative impacts on both prices and competition in the NSW retail energy market. PIAC argues that the Victorian ETF cap of $20 is more appropriate than the cap of up to $130 in the first year of a contract, proposed by IPART.
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