Power ‘price gouging’ that has trapped Victorians into deals they cannot escape from
Exclusive deals between developers and electricity companies are leading to crippling power bills due to “price gouging”, leaving residents desperate for change. Could this be the answer?
VIC News
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Tens of thousands of Victorians are still falling victim to “price gouging” on their power bills despite the Andrews Government promising to end deals between energy retailers and apartment developers.
Up to 1.6m Victorians live in multi-dwelling units - and many are locked in contracts they cannot break free from as a result of contracts allowing retailers a captive market of clients who cannot shop around for a better deal.
Developers save costs by contracting electricity companies to supply the infrastructure and the metering throughout a building, and sometimes are paid huge sums by the retailer, who then recoups the money from tenants and owners.
Most contracts - known as embedded networks - are decades-long and the Herald Sun is aware of one that lasts 99 years.
Energy Minister Lily D’Ambrosio yesterday said “for too long” people with embedded networks were being “ripped off on their power bills”.
But any ban on embedded networks in new buildings won’t be in place until at least next year and the only relief current embedded network customers will get is a proposed price ceiling that sets a maximum amount they can be charged.
Ms D’Ambrosio said the Essential Services Commission was consulting about what that figure will be now but it is months away from being finalised.
The Victorian Default Offer introduced by the Andrews Government last year ignored those trapped by embedded networks.
Planning Minister Richard Wynne vowed they would be abolished. “We are going to offer people a choice and we are going to ban single-network providers,” he said ahead of the 2018 Labor landslide.
Gerard Brody from the Consumer Action Law Centre said it was a “significant problem” for many Victorians with complaints about embedded networks made regularly to his office.
Strata lawyer Tom Bacon said the move to ban the networks was “cold comfort” to those stuck on an embedded network that isn’t performing well.
“This is big business and huge revenues for these electricity companies, and the industry will continue to flourish for years ahead.”
The developer of Aidan Read’s South Yarra building signed a 99 year lease for the embedded electricity and internet to itself, when the developer was the only owner. The provider continually hiked prices up “because they have the power to do it”, Mr Read said.
He was doubtful the price ceiling would solve the problem faced by thousands of Victorians.
“The default offer is ridiculously high. People are still paying more and can’t do anything about it.”
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