Experts say power bill reform promised as ‘vital’ will have marginal effect on households

Chris Bowen has described his new electricity pricing rules as “vital reform”, but experts disagree and say homeowners should not expect to see their power bills decrease.

New electricity pricing rules that Chris Bowen has described as “vital reform” will have a marginal effect on household bills, a top consumer advocate says — unlike the cost of new transmission lines to renewable energy zones or the closure of coal-fired power stations.

From next year, across eastern Australia, unreasonably high penalties for not paying on time will be banned and retailers will only be allowed to increase charges once every 12 months.

It may also be that a so-called “competition allowance” for acquiring and retaining customers is removed. Victoria, which sets its own regulations, has already done this. And the Australian Energy Regulator (AER) axed the allowance from its latest pricing decision as well.

Mr Bowen initially described the price rule changes as both “vital” and “important”.

Chris Bowen described the new electricity pricing rules as a vital reform. Picture: Jason Edwards

But he then conceded they were no “silver bullet” to fix the problem of ever-rising bills, or even the complexity of the information that retailers send to their customers.

“I’m not pretending that they will, you know, completely be revolutionising the way energy bills work in this country,” the Climate Change and Energy Minister told ABC Radio.

“But things like only one increase a year (and) a clear requirement on energy retailers that customers in hardship should be on their best available energy plan” would make the market “better and fairer”, Mr Bowen said.

St Vincent de Paul’s national director of energy policy and research Gavin Dufty called the moves a “good tidy up” that would have a “marginal” effect on household bills.

There would be a “more material” impact from recouping the cost of transmission lines to renewable energy zones and the closure of coal-fired power stations than from “forcing a retailer to contract for 12 months”, Mr Dufty said.

Experts say homeowners should not expect power bills to decrease.

AGL argued that Mr Bowen was focusing on the 10 per cent of the bill related to retail costs instead of the “whole picture.”

“At 40 per cent of an average bill, network costs are a big component ... and are continuing to grow quickly,” the giant power retailer said, in comments directed at the potential axing of the competition allowance.

The AER recently found that in NSW, network costs and renewable energy “roadmap” expenses will be significant factors in the next round of price increases.

Shadow Minister for Energy and Emissions Reduction Dan Tehan said: “Australians hit with another round of electricity bill hikes will welcome anything that helps them get a better deal but what would really help is if Labor delivered on their promise to cut power bills by $275.

“Minister Bowen is refusing to tackle head-on the pain caused by another round of electricity bill hikes, with many households facing a $300 increase from July 1,” Mr Tehan said.

“People need help now and they need that $275 off their bill that Minister Bowen promised.”