PIAC responded to the Australian Energy Regulator’s (AER) consultation on setting the 2020-21 Default Market Offer (DMO) price.
Broadly, PIAC disagrees with the AER’s assertion that the initial iteration of the DMO achieved its intended objectives. We contend that the initial DMO was based on a number of flawed assumptions that have meant many consumers are still being overcharged for an essential service. We raise concerns that if the 2020-21 DMO uses the same flawed assumptions of the initial DMO, it will similarly fail.
As such, we strongly recommend the AER reconsider the proposed option for calculating the 2020-21 DMO, reassess the intent of default pricing, and look at ways the stated objectives can be better realised in the long-term interests of consumers. PIAC considers Option 3 – a cost-based approach to determining the 2020-21 DMO, consistent with the formulation of the Victorian Default Offer – is preferable.