Implications for Competitive Market in Pricing Review

Limiting the ability of electricity retailers to offer incentives to new customers to sign up to better deals will have major implications for the competitive market, according to the peak body for retailers, the Australian Energy Council. 

The Australian Energy Market Commission (AEMC) has proposed changes to retail pricing as part of its pricing review, including requiring retailers to charge customers on the same plan the same price. 

The AEC’s CEO, Louisa Kinnear, said “while on the surface the suggested change appears reasonable, current practices reward customers who actively shop around. If the proposed changes are implemented poorly, it could result in increased prices for all customers.  

“This recommendation removes the benefits for customers who do engage in the market and could in fact end up penalising them. It’s important that customers are encouraged to shop around, have a choice of retail products and can find the best deal to suit their circumstances.  

“Offering better deals is an essential part of the competitive market and allows retailers to attract new customers. We don’t want regulatory reforms to result in more customers losing out. 

“From our perspective reforms to the retail energy market should focus on understanding and addressing real barriers to those who are unable to actively participate in the market, not those who choose not to.  

“Disengagement does not mean disadvantaged. Many customers choose not to engage in the market because they are happy with the services provided by their energy retailer. 

“There is already a safety net in the form of the regulator-set Default Market Offer and Victorian Default Offer for customers who do not shop around, and these are set so they pay a reasonable price for their electricity.” 

Ms Kinnear said that other recommendations made by the AEMC would help make a difference for customers, such as changes to network tariffs to avoid complexity. 

“This will go a long way to addressing existing barriers to retail product innovation. 

“We will continue to seek to work with the AEMC and encourage them to actively engage openly and transparently with us and our members to ensure the recommendations can work for customers”.  

About the Australian Energy Council 

The Australian Energy Council is the peak industry body for electricity and downstream natural gas businesses operating in the competitive wholesale and retail energy markets. AEC members generate and sell energy to 10 million homes and businesses and are major investors in renewable energy generation. The AEC supports reaching net-zero by 2050 and is committed to delivering the energy transition for the benefit of consumers.