Review seeks electricity priced as simply as milk
Retailers have been forced to admit the number of customers charging too much for loyalty features has been revealed in a comprehensive review of the electricity pricing system.
Tackling the “loyalty tax” was one of the objectives of Australia’s electricity regulator’s self-initiated review aimed at bringing the electricity pricing framework into the modern age.
The Australian Energy Market Commission also has a plan to reform network tariffs to ensure that households with solar and batteries are both appropriately rewarded and support the grid, and that tenants and other customers without such kit are not overpaid.
It has been a long-standing scourge that disconnected electricity customers are faced with uncompetitive offers after attractive promotional deals expire.
The AEMC wants to “shine a light” on the problem to encourage more consumers to switch, including forcing retailers to report forgone savings to long-term customers.
Retailers should also be forced to publish tallies of how many customers are overpaying for brand loyalty.
Consumer advocacy groups such as Energy Consumers Australia had been pushing for tighter pricing regulations, beyond greater transparency, in the hope of stopping the burden falling on time-starved consumers to switch.
Network tariffs, which cover mast and cable costs and contribute around 40 per cent to bills, were also the focus of AEMC’s attention and the source of strong debate in 2,700 review submissions.
Grid pricing has traditionally been linked to electricity consumption; This made sense when electricity was transported from large coal-fired stations to customers in a one-way system.
But today, millions of households generate their own electricity on their rooftops, batteries are booming, and electrification continues apace; This allows many people to use less grid electricity and therefore pay much less for network costs.
While it provides savings for solar-equipped homes, it has narrowed the pool of customers who pay more for the network, including renters and other groups deprived of the technology.
Energy bAEMC chair Anna Collyer said millions of Australians investing in solar power, batteries and electric vehicles were reshaping the grid for the better and the proposed pricing system “keeps up with what they’re building and rewards them appropriately for it”.
He said the proposed network tariff design would create more targeted opportunities for battery owners to be rewarded based on the value they provide to the grid.
“Reducing congestion, relieving pressure at peak times and helping to keep costs low for everyone.”
The rulemaker also wants to shift household bill complexity to retailers and energy service providers.
Aim. Electricity is priced as simply as milk in the supermarket.
“You don’t get separate invoices for the cow, the carton and the shipping,” Ms Collyer said.
“You get a simple shelf price.”
The AEMC cannot act on its recommendations unless a rule change request is made by a third party to trigger the legislative change process.
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
