Recent energy rules could blow up electricity bills

The NSW and Federal government are collaborating under an initiative aimed at helping consumers to shop around and find the best energy deals despite speculations that this could actually mean increased electricity bills.

Plans to alert consumers of price changes

The two governments have vowed to compel the Australian Energy Market Commission (AEMC) to formulate new rules that will force energy retailers to alert their customers of any imminent electricity price increases before they happen, hence giving consumers ample time to shop around for better deals.

The Federal government Minister for Energy Josh Frydenberg said the main aim is to drive down electricity bills. This latest move follows rules that were created to ensure customers are duly notified by their electricity retailers when their energy discounts expire.

“Currently, retailers don’t have to inform customers of price changes until their next bill, which can be months after the price change has occurred – meaning customers can be paying more than they thought without being aware of it,” Mr Frydenberg stated.

“This needs to change to ensure customers are getting a better and fairer deal.”

“The proposed rule change builds on the work we have already done requiring retailers to notify electricity and gas customers when their energy discounts are about to finish or change, and the work we are doing to ensure simpler and more comparable information for customers to choose a better deal,” he added.

The AEMC chairman John Pierce appreciated that this was the third initiative implemented since the government’s meeting with energy retailers in August 2017. He also stated that the commission would consider the NSW and Federal government’s rule request as soon as they receive it.

This is not the first time in the 12 months that the cost of power in New South Wales has been a cause for consumer concern, with some retailers raising prices 20% last year. 

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Industry compliance

Jon Briskin, Executive General Manager of Origin Retail said the energy company wanted their “customers to have simple and clear information about energy pricing to help them access great energy deals all year round.”

“We’ll continue to work with governments, market operators and regulators on the best ways to achieve this.”

According to Don Harwin the Energy Minister of NSW, the new rules are expected to give energy customers the necessary information to help them secure a better deal, or choose a new supplier, putting emphasis on power prices.

“This measure follows steps we have already taken in NSW, including banning retailers from charging exit feeds when customers switch suppliers, banning paper bill fees, boosting rebates by 20 per cent and requiring retailers to help customers receiving energy rebates,” Mr Harwin stated.

Will changes inflate electricity bills?

Unfortunately, many insiders in the industry are skeptical. One of the electrical retailers advised that even though the new announcement is perceived as well-intentioned and aimed at ensuring transparency, many power companies had future price increases already telegraphed via online information and public notices, and the new rules would only create additional costs to bills as companies strive to recoup the notification costs.

He noted that costs incurred by the three giant electricity retailers—AGL, Origin and Energy Australia—to mail notifications to all its consumers could range from $800,000 to $1 million.

Australia Institute’s recent survey assessing how lower income households consume electricity found out that while cutting prices can help, educating consumers on energy usage and efficiency could have a greater impact.

“Around four per cent of all households nationally may be particularly vulnerable to increases in electricity prices,” Australian National University Centre for Climate Economics and Policy Associate Professor Hugh Saddler noted.
“The optimal policy approach should be to address the underlying problems, not to subsidise the cost of electricity.”

The federal government is leading the way on this through an initiative it undertook through a review of the Greenhouse and Energy Minimum Standards Act (GEMS), which is expected to lay down energy efficiency standards for home appliances and equipment, significantly minimizing energy consumption and in turn electricity bills.

The Author

I took an interest in the Australian energy sector close to ten years ago and since then have monitored the trends, technologies and direction of the Australian Energy Market. I was drawn to the Australian solar market in 2008 and since then have worked heavily in the field. I am partnered with national and international solar energy companies, from manufacturers of solar panel and inverter technology, online software developers that introduce tools to quote, monitor and manage solar power systems and media organisations who like myself, closely monitor the solar and renewable energy sector.

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