Power prices surge 23pct, reform needed

Image Source: AAPNEWS

The consumer watchdog has warned of further electricity price rises as the number of retailers shrinks and global factors weigh on the energy market.

The Australian Competition and Consumer Commission said in its latest national electricity market report the typical household power bill between April and October increased by about $300 a year, or 23 per cent.

"And there are signs this will increase further," the report released on Thursday said.

The watchdog warned many households were struggling to pay for electricity, and reforms were needed.

"With prices expected to remain high, governments and regulators need to ensure policy and regulatory settings around energy affordability continue to evolve to better protect consumers," it said.

The report includes five recommendations, including monitoring of contract market trading by national electricity market participants and changes to regulated retail price setting.

As well, the retail code should be changed to allow the Australian Energy Regulator to adjust the "default market offer" - the price cap on standing offers - for consumers outside of the annual price setting cycle.

The annual process has been thrown out of whack by a range of factors in the market, meaning by October most market offers were priced close to standing offers - with some more expensive than the regulated price.

The ACCC also wants a better system to ensure electricity price comparison services, which allow customers to shop around for the best deal, are operating fairly and transparently.

The watchdog is concerned some do not compare all offers from all retailers nor recommend the cheapest offer.

A final recommendation calls for customers of "embedded network" retailers - those who supply electricity to small networks such as shopping centres or caravan parks - be allowed to access price cap protections.

The report revealed retailers are dropping out of the market amid high and volatile wholesale electricity spot prices, coupled with high contract prices, reduced access to hedging contracts, compensation payments and retail price caps.

Since May, six retailers have exited the market and several are no longer seeking new market offer customers.

"The result is consumers moving from small and very small retailers towards retailers with larger market share, increasing market concentration."

At the same time, coal and gas prices are being pushed up due to Russia's invasion of Ukraine disrupting supply, a high level of scheduled and unscheduled coal generation outages, weather impacts and coal industry issues.

The report comes as energy ministers meet in Brisbane to discuss medium to long term solutions to high power prices and cutting emissions to deliver on the government's promise of net-zero by 2050.



 


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