ABC News - Amy Bainbridge
The consumer watchdog believes Australians are paying too much for their electricity.
A lack of competition in the energy market and policy mistakes by successive state and federal governments
has added significant costs to power bills, according to the Australian Competition and Consumer Commission (ACCC).
The
watchdog says power bills can be reduced by at least 25 per cent — 25
per cent! — if governments adopt a series of recommendations from its
report on the energy market.
And the ACCC's chairman, Rod Sims, reckons that's a conservative saving.
Here's what you need to know from the Retail Electricity Pricing Inquiry report.
Who's to blame for high energy bills?
Everyone, and no-one.
Mr
Sims said among the many reasons why bills have gone up, multiple
governments have made poor decisions over the years that have
contributed to ripping off consumers.
Then there's market concentration in some parts of Australia, confusing bills, and the gold-plating of the energy network.
"They've
gone up because costs have increased right across the board — the costs
of the poles and wires, retailer costs, retailer behaviour in the sense
of deliberately confusing offers for customers," Mr Sims told the ABC.
"We've got a lot of costs imposed into the system, the market's too concentrated and we've had some unfortunate behaviour by retailers."
So how can bills come down?
The ACCC reckons if all of its recommendations are adopted, people will save at least 20 to 25 per cent on their bills.
But it says many people, including small and large businesses, could save much more.
The biggest change to ensure this would require a base or "default" price for power in each jurisdiction.
"[It's]
really important. We're suggesting the default offer that's in the
market be regulated by the Australian Energy Regulator and that all
discounts have to come off a common base," Mr Sims said.
"That will mean you'll get clearer marketing to consumers, and therefore they'll be better placed to take up better offers.
"But for those people stranded on very high offers, those prices will automatically come down."
Mr Sims said part of the problem was that people were sold energy
deals, and were then taken advantage of if they didn't stay on top of
their bills or shop around.
"We are going to end that by having
the Australian Energy Regulator set the price for those who don't engage
in the market, and it will be the base from which discounts occur," he
said.
"So when a customer sees a discount of 20 per cent from one
player and 15 per cent from another player, they have every confidence
the 20 per cent discount is the best offer."
The ACCC said another
key way to slash bills would be for governments to fund the write-down
of network assets, such as the poles and wires.
Tony Wood from the Grattan Institute said that was a good idea.
"I
think this is heading in the right direction because the network prices
constitute more than 40 per cent of the end-user bill, both for
households and small businesses," he said.
My power bill is confusing. Will this change?
Under the ACCC's recommendations, yes it will.
It recommends simple pricing, minimum payment periods, and access to
paper bills for any default offer set by the Australian Energy Regulator
(AER).
Also, if you move house and haven't contacted an energy
retailer, you would be offered that default price on power that's set by
the AER.
The ACCC report also recommends changes to marketing, so
headline discounts are set from the AER's default price and they must
include a guaranteed discount.
This is because some electricity
plans offer discounts for short periods, before going on to charge
consumers a much higher price.
In other cases, discounts apply if you pay on time and if you're late you get slapped with a fee.
Mr Wood said it was a "no-brainer" to sort out misleading practices.
"The Government has been trying to embarrass the retailers to do something about it," he said.
"They've
clearly failed to take real action so far and I think it's one that's
going to have to be tightened up — weird advertising, confusing
advertising, strange discounts no-one can understand, penalties for
paying about 24 hours late, big penalties."
What if I'm facing financial hardship due to my big bills?
The report wants concession schemes improved, including applying a means test to ensure they are targeted at those most in need.
The ACCC also suggests introducing a targeted scheme to improve energy market literacy.
It
recommends additional government funding to a value of $5 per household
in each National Energy Market (NEM) region — or $43 million across the
NEM — to assist vulnerable consumers.
What about comparison websites, do they get me a better deal?
The
ACCC said there needed to be a mandatory code for comparison websites
so offers were based on customer benefit, not commissions.
And it recommended the code should contain civil penalty provisions for any breaches.
"Comparator websites have a very mixed record and they are very costly, which adds cost into the system," Mr Sims said.
"The mandatory code means they would make their commissions clear and they would put the customer first."
I've got solar panels, what does this report mean for me?
It shows you've been getting a good deal.
But things might change pretty soon, with the report recommending subsidy schemes for solar eventually be scrapped.
The report found solar customers were paying on average $538 per year less than non-solar customers.
That suggests affordability concerns are most acute for those customers who have not, and possibly cannot, install solar panels.
The ACCC recommends changes to solar panel subsidy schemes.
"If
governments want to subsidise solar panels, that's absolutely fine, but
they should be doing it from their budgets," Mr Sims said.
"They shouldn't be charging other energy consumers more so that those who've got solar panels receive a subsidy."
The
report said households with solar energy had benefited from generous
feed-in tariffs, and also received subsidies for the installation of the
system itself through the Small-scale Renewable Energy Scheme (SRES).
"Meanwhile,
non-solar households and businesses have faced the burden of the cost
of premium solar feed-in tariff schemes and the SRES," the report said.
The
ACCC recommends that any costs remaining from premium solar feed-in
schemes should be borne by state governments through their budgets, as
Queensland has done, rather than being recovered through charges to
electricity users.
The report also recommends the SRES should be
wound down and abolished by 2021 to reduce its impact on retail prices
paid by consumers.
That's alarmed the Smart Energy Council, which
is calling on the Government to immediately rule out abolishing the SRES
in the wake of the report.
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