Household energy costs soar as retailers increase their cut of bills

GREEDY energy retailers are fleecing Victorians by up to $400 a year, a new report has found.

GREEDY energy retailers are fleecing Victorians by up to $400 a year by increasing their cut of household power bills, a new report has found.

It has revealed that competition in electricity retailing has failed to deliver lower prices for consumers and urged governments to step in and re-regulate prices if the industry does not lift its game.

A new Grattan Institute report found that Victorian electricity retailers are claiming a margin of around 13 per cent — which is more than double the figure considered fair when state governments had responsibility for setting prices.

Household electricity bills have soared more than 119 per cent in Victoria over the past decade, with families now ­paying $1837 a year on average.

Energy retailers are fleecing Victorians by up to $400 a year by increasing their cut of household power bills. Picture: iStock

The closure of Hazelwood power station later this more is also expected to force up power bills by up to 10 per cent.

It comes as the Federal Government prepares for crisis talks over a looming gas shortage.

The report found Victoria’s 2.5 million households would save about $250 million a year — an average of $105 for each home — if the profit margin of their electricity retailers was the same as other retail businesses.

It revealed while consumers who had been willing to switch companies were paying less than before, others were paying up to $400 more than they should.

Consumers are also finding the market so complicated that many have give up trying to find the best deal — including some of the most vulnerable who are paying more than they need to.

Grattan Institute Energy Program Director Tony Wood said the way retailers advertised their discounts was confusing and possibly misleading.

The report also recommends the Victorian Government to require retailers to put concession customers on the best available offer.

It found the government’s $135 million annually bill for electricity concession payments to 900,000 households would also be drastically reduced.

The report argued competition in the market had also failed to deliver the promised innovation in customer services, with retailers failing to build offers based on the benefits of smart meters or bundling together of new technologies such as solar-power and battery-storage systems.

“We may yet see fairer prices. We may yet see better service. But if not, government will have no choice but to return to price regulation,” Mr Wood said.

Prime Minister Malcolm Turnbull told the Herald Sun yesterday Australian households and businesses were paying “too much” for their electricity.

“Our Government has led the way on putting energy reliability, security and affordability as our top priority.”