News

New proposal to fix energy prices for length of contract

Energy retailers would be banned from increasing a customer’s tariff mid contract under a proposal to be considered by the Australian Energy Market Commission (AEMC). Current rules allow retailers to increase prices at any time during a fixed term contract, meaning a family can sign a multiyear deal only to have the price increase before receiving the first bill.

Consumer Action Law Centre and Consumer Utilities Advocacy Centre (CUAC) have made a rule change application to the AEMC, to help maximise consumers’ long term economic welfare, and to promote competition within the energy market.

‘Australians think a contract actually stands for something – that the price you sign up for is the price you should pay. But energy companies are given a free ride and can increase prices at will. It’s blatantly unfair and needs fixing,’ said Gerard Brody of Consumer Action Law Centre.

‘94 per cent of respondents to a recent survey believe retailers shouldn’t be allowed to increase prices during a contract, so our proposal is in line with community expectations.[1]  Australians can learn more about the issue and add their voice to the call for change at www.fixit.org.au,’ said Mr Brody.

Consumer Action and CUAC’s rule change proposal is a common sense step towards fixing a broken and unfair energy market.  Fixing prices for the term of a contract would:

Make shopping around worthwhile; in the face of high prices, consumers are urged to shop around for the best deal. But what’s the point of shopping around when the retailer can increase the price after they’ve signed you up to a long term contract?

End unfair sales tactics; a retailer can deliberately set prices below market level to attract customers, then increase its price once a consumer has signed a contract.

Give families certainty; Utility costs are the leading cause of consumer anxiety among Australians.[2]  The proposed rule change would give families certainty and help them budget for their energy bills.

Stop retailers playing by their own rules; your phone company can’t increase the cost of your plan mid contract, and insurers can’t increase premiums mid contract. It’s time energy retailers played by the same rules as everyone else.

Mr Brody said the AEMC will soon be consulting on the proposed rule change and encourages Australians to have their say. ‘If you want to put a stop to ever increasing energy bills, jump onto www.fixit.org.au and help us put fairness back into the energy market.’

END

Notes:
A summary of Consumer Action and CUAC’s rule change proposal is attached, and a full copy of the proposal, including economic analysis, is available here. The proposal seeks to change the National Energy Retail Rules, which are made under the National Energy Retail Law.

The rule change is not applicable to Western Australia or Northern Territory which have not adopted the National Energy Retail Law. Victoria and Queensland are also yet to adopt the National Energy Retail Law, however the Queensland Government has stated that it will transfer to the national regime during 2014. The Victorian Government is presently aligning its Energy Retail Code with the rules under the National Energy Retail Law.

The rule change submission relates to residential energy market offers.

Media contact: Dan Simpson, 0413 299 567