Energy regulator to set new default market offer to drive down household power bills

A NEW default market offer for households and small business power bills will be established to ensure customers’ loyalty towards their energy provider is not being exploited.

A NEW default market offer for households and small business power bills will be established to ensure customers’ loyalty towards their energy provider is no longer exploited.

The Morrison Government will today order the Australian Energy Regulator to introduce a default price, which was first flagged by the consumer watchdog’s retail electricity pricing inquiry this year.

Abolishing the current retail standing offers — which are not the same between retailers — and replacing them with a new default offer could save Victorian households up to $652 a year.

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The government will also introduce new laws requiring retailers to reference any discounts to the new default offer, making it easier for consumers to genuinely compare offers.

Under the change, energy companies will not be able to spruik conditional discounts, such as pay-on-time discounts, in any headline discount claim.

The default price will replace the current standing offer in Victoria, New South Wales, South Australia and South East Queensland where power prices are not regulated.

“This is another important step by this government to deliver genuine savings for Australians,” Treasurer Josh Frydenberg said.

“The AER will commence work immediately to determine a default offer price to apply to each network distribution region.”

The Australian Competition and Consumer Commission inquiry, released in July, found moving average households who are still on the range of current standing offers to the new default offer could result in savings of between 25-35 per cent a year.

Similarly, small and medium businesses could save $1450-$2250 each year by moving to a standard default offer.

It found currently more than 20 per cent of small businesses were on high standing offers.

Mr Frydenberg said implementing these reforms would require the co-operation of state and territory governments to implement the required changes.