Energy Retail Markets Review To Highlight Benefits of Competition

Victoria’s retail energy market review is likely to find that Victoria remains one of the most competitive energy markets in the world, and help highlight key factors behind price movements, the energy industry said today.

The Australian Energy Council’s Chief Executive, Matthew Warren, said, “around 90 per cent of Victorian customers have already switched to more competitive market offers, which deliver a broader range of discounts and different deals for consumers.

“The Australian Electricity Market Commission already independently assesses competition in energy markets, including Victoria’s. However, we support any initiative which might help us understand why 9 per cent of residential electricity customers and 11 per cent of gas customers prefer standing offers to more competitive market deals.

“Last year standing offer electricity prices fell 1.9 per cent and that followed a drop of 3.6 per cent in the prior year.

“As was signalled earlier this month, this downward trend looks likely to be interrupted by the impact of the Hazelwood Power Station’s closure, and Victorian consumers will see significant increases in energy costs next year as a result of it ceasing operations in March.

“This cost increase is a by-product of the reduction in the state’s generation capacity of around 20 per cent.

“The price increases coming next year have nothing to do with retail competition, they are a direct result of major changes in the generation of electricity and the wholesale electricity market,” Mr Warren said.

“These changes, in addition to State Government policies like increased renewable energy targets, increased brown coal royalties and an expanded Victorian Energy Efficiency Scheme, will impact on future retail electricity prices.

“Even with the expected increases in standing offers Victorians can achieve a discount of more than 30 per cent by simply moving from standing offers to a market offer. This could represent household savings of up to $383 each year off the median standing offer.

On gas prices, Mr Warren said that they were are rising due to a major shift in the market following the establishment of an east coast LNG industry. “This trend will only be exacerbated by the State Government’s moratorium on new gas exploration,” he said.

About the Australian Energy Council

The Council represents 21 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.

Media contact             Carl Kitchen                0401 691 342