AER Review of Default Market Offer Prices 2021-22 position paper

PIAC made a submission in response to the Australian Energy Regulator’s (AER) position paper setting Default Market Offer (DMO) prices for 2021-22. PIAC highlighted the DMO has had a range of positive impacts no only for people on standing offers, but for the bulk of consumers whose market offers are more fairly priced.

We noted evidence shows the DMO has not limited competition or curtailed innovation or development of the market. We reiterated our contention that default prices more closely linked to efficient costs of service would not only provide a more meaningful reference to inform consumer choice, and enable further benefit for more consumers on fairer-priced deals, but also provide a strong ongoing incentive to retailers to offer services that people want and a fair price.

We continue to recommend reform of the objective of the DMO and how it is set, to further benefit consumers and the shape of the market. In the interim, PIAC recommended a range of measures, including the application of a productivity factor to the annual DMO setting process, to ensure that it retains the impact it has had to date.