A race between Canberra and Spring Street to re-regulate energy prices will be to customers’ detriment and undermine retail competition and investment in generation, the energy industry said today.
The Australian Energy Council’s Chief Executive Sarah McNamara said regulating retail markets puts investment in generation at risk, and the savings that come along with a more stable wholesale market. “The Australian Competition and Consumer Commission (ACCC) report was clear. A reduction in the wholesale price will deliver significantly more savings to consumers than re-regulating the retail price. Putting these savings at risk for political gain is not in anyone’s interest.
“Victoria’s attachment to re-regulation, absent any examination of the costs and benefits to the average consumer, is fraught with unintended consequences.
“To try and help the nearly 6 per cent of Victorians still on standing offers, the government’s move is likely to make all households worse off over time. That is because re-regulated markets often shrink, reducing the number of really cheap deals available, and forcing smaller retailers out of the market.
“The industry has been working on measures to make the energy market more transparent, and supports the recommendations in the ACCC report which deliver sustainable savings across the supply chain.
“Today’s decision will also undermine investment in renewables – aside from those bankrolled by Victorian taxpayers - and the development of innovative products which support consumers, because retailers won’t be able to afford those investments,” Ms McNamara said.
“We will work with both the Federal and the Victorian Governments to clarify how each of their default offers will work. But neither is likely to fix the ongoing issue. The plain fact is that prices have been high because input costs are high. The wholesale market cannot stabilise without a national policy framework and a sensible and co-ordinated approach to regulation at a Federal and State level.”
About the Australian Energy Council
The Council represents 22 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.
Published in The Australian, 16 December 2021 By Sarah McNamara, Chief Executive, Australian Energy Council In mid-2020, the Australian Energy Council supported adoption of a Net Zero by 2050 target for Australia.
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