Energy companies on notice as the ACCC moves in
Finally, the pollies in Canberra are listening to what our members and other Australians have been saying for a decade: power bills are far too high.
PRIME Minister Malcolm Turnbull announced this week an Australian Competition and Consumer Commission’s (ACCC) review of retail electricity prices because the markets don’t appear to be operating as effectively as they could be.
The Prime Minister made specific mention of a report by the Grattan Institute who have indicated that excessive profit margins are being made by retailers in the electricity market.
The terms of reference for the ACCC will be key cost drivers of power bills, barriers to consumers getting good offers and whether retailer behaviour is preventing competition.
Joel Gibson from One Big Switch called the review a “shot across the bow for electricity retailers”.
Joel told us on the Daily Drive show that one of the biggest drivers is over investment in poles and wires (gold plating) where the owners of the poles and wires have spent a fortune upgrading them and they get paid according to how much they spend so they spent up big.
In a poll of Fiftyup Club members we found that around 70% said it’s confusing and difficult to compare energy products. Any market where 70% are finding it tough it must affect competition.
The other area of concern is the practice of quietly defaulting customers to the most expensive plan once their 12 month cheap offer has expired. In the UK, you automatically default to a mid-range product.
The ACCC is expected to report initially within 6 months and finally by July 2018 but in the meantime it does pay to review your bill and stick up for yourself.
Treasurer Scott Morrison said the inquiry would provide better information on what was actually driving electricity prices and the ACCC had the powers and skills necessary to “go to the heart of these questions. Beyond that it will look at existing cost structures and margins and review these against the contracts offered to consumers and businesses.”
ACCC Chair Rod Sims said electricity prices had nearly doubled on top of inflation in most parts of Australia over the last decade based on a variety of different factors.
Mr Sims said it would be important to understand and examine these different factors in each state and territory, as part of the new inquiry.
“The ACCC is also keen to look at the structure of the retail industry, the nature of competition, the representation of prices to consumers and other factors influencing the price paid by Australians for electricity,” he said.
“We enter this inquiry with an open mind and look forward to developing recommendations which can make a difference for Australian households and businesses.”