Unless electricity prices fall, power retailers will fail the test in new big stick laws
Electricity retailers will have failed the test built into new “big stick” power price laws if they don’t slash prices on July 1, the nation’s top energy consumer advocate says.
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EXCLUSIVE: Electricity retailers will have failed the test built into new “big stick” power price laws if they don’t slash prices on July 1, the nation’s top energy consumer advocate says.
The laws take effect June 10 and seek to compel retailers to pass on “sustained and substantial” cost reductions under threat of a series of escalating penalties, the harshest being forced divestment of assets.
For the past six months wholesale electricity rates – which make up more than 40 per cent of small business bills – have been down by more for a third compared to a year earlier. The exception to that was January when extreme heat pushed up prices.
Federal Energy Minister Angus Taylor told The Daily Telegraph: “All the indicators are that the dynamics driving that are structural, not just one offs.”
But “we’ve got to see the drops in wholesale prices being passed on to customers.
“That’s why we’ve got the big stick in place,” Mr Taylor said. “The companies know they are on notice."
Top advocacy group Energy Consumers Australia’s CEO Lynne Gallagher said “flat or increasing prices this year will fail” the test built into the big stick laws.
Were the reductions passed on in full when prices change on July 1 then the typical household would see $200 shaved from its annual bill while a small business would save three times that.
Australian Competition and Consumer Commission chairman Rod Sims told The Telegraph the big stick had come along at a “very helpful time” for country as it seeks to bounce back from the coronavirus crisis with the aid of affordable energy.
“It’s a really important issue for the economy as a whole,” Mr Sims said.
“These reductions in wholesale electricity prices are significant – for households and small businesses.”
Mr Sims said he understood the view of some critics that the divestiture power would never be used.
“But that’s a completely different thing to saying there will not be court cases. I think there very likely will be,” Mr Sims said.
The big stick legislation allows the ACCC to take legal action seeking penalties of up to $10 million, three times the benefit of the conduct, or 10 per cent of the annual turnover of the perpetrator, whichever is greater.
Mr Taylor said: “If the big players start playing games with that they are putting themselves at risk of the big stick and the ACCC will be watching that closely.”
Mr Sims would not be drawn on whether the falls to date qualified as “sustained and substantial”, saying that was up to his investigators to determine once the laws were active.
“It is a matter of judging when that constitutes a sustained reduction,” Mr Sims said. “But it’s a pretty health change.”
Originally published as Unless electricity prices fall, power retailers will fail the test in new big stick laws
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