Default price for energy coming in radical retail market shake-up

SOUTH Australian households could save hundreds of dollars a year and small businesses thousands under a radical shake-up of the electricity market to be unveiled today.

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SOUTH Australian households could save hundreds of dollars a year and small businesses thousands under a radical shake-up of the electricity market to be unveiled on Tuesday.

Federal Energy Minister Angus Taylor will today announce that the Australian Energy Regulator will work with retailers to implement a default price for electricity.

It would give consumers who are still on costly standing offers a simple switch to a cheaper basic market contract — if retailers agree to comply to the push to lower prices for consumers.

At present, about 110,000 South Australian households and businesses are still on standing offers, which are the legacy of the ETSA privatisation, because of customer loyalty or an inability to shop around for a better deal.

Consumers can also be placed on these offers if their market deal ends and they have not shopped around for a new one.

Mr Taylor said standing offers were expected to be a “fair price”, but modelling had revealed these were much higher than an estimated default price.

Once introduced, default market contracts could slash SA power bills by up to $832 a year for households, and up to $3457 a year for small businesses.

The savings in SA would be the highest in the nation, modelling by the Australian Energy Market Commission shows.

“The default offer will ensure customers are not being exploited by being loyal to a service provider,” Mr Taylor said.

The energy regulator is expected to immediately begin work to determine the default price for 13 regions across the country.

The introduction of a default price was a key recommendation from the consumer watchdog’s Retail Electricity Pricing Inquiry, unveiled mid-year.

The Government will also implement another recommendation, that will require retailers to calculate and advertise their discounts to help customers compare offers to find the best deal. The reforms will require legislation and the co-operation of the states and territories.

Originally published as Default price for energy coming in radical retail market shake-up