Radical plan for state-owned electricity retailer put on Andrews Government’s agenda

THE Andrews Government will consider a radical plan to create a state-owned electricity retailer that only deals with low-income households.

THE Andrews Government will consider a radical plan to create a state-owned electricity retailer that only deals with low-income households.

The proposal for a taxpayer-funded retailer, which a social services group warned could create more “winners and losers” in the energy sector, is being billed as a cost-saver for government.

But energy experts say it would expose taxpayers to massive financial risk in the wholesale market.

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Leaked documents from consultancy Accenture show the government provides 911,000 households with a 17.5 per cent concession discount on electricity, and many of them are not on the best market rates.

By creating a state-owned retailer, it says the government would save $30 million a year, while concession-holder households could save $234 on annual bills.

A spokesman for Energy Minister Lily D’Ambrosio said it was “an unsolicited proposal from an organisation outside government”, and would be considered through the market-led proposal process.

The state-owned retailer — costing up to $40 million to set up — would be the fifth-biggest retailer in the country if it serviced all Victorian concession customers.

Grattan Institute energy program director Tony Wood said this could “completely kill competition”.

Victorian Premier Daniel Andrews. Picture: Stefan Postles / AAP

He said if the state wanted to intervene, it would be better to ask an existing retailer to handle all concession customer contracts via a competitive tender process.

“One of the most important things retailers do is manage the wholesale market … they are potentially exposed to significant risk if they get it wrong,” he said.

“Taxpayers would now be taking on market risks.”

Vinnies policy and research manager Gavin Dufty said interventions in one part of the market could impact other parts.

“We don’t want a situation where we create, like solar, a new group of winners and losers where mums and dads who can’t get solar and can’t get this retailer are left doing all the heavy lifting,” he said.

Victorian Council of Social Service chief Emma King said the plan could be a “circuit breaker” if properly designed and would need to be open to all Victorians so they could choose “any lower-priced deal in the market”.

Earlier this month, Premier Daniel Andrews slammed the privatisation of the electricity retail market, saying “it’s only made things harder for families”.

Labor’s draft policy platform promises to explore setting up a “low cost, not-for-profit retail option for consumers who do not have the time and resources to meaningfully participate in the market”.

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