Move to block NSW electricity price deregulation

The state government's electricity price deregulation laws, which come into effect today, could be repealed when Parliament returns after the winter break.
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01.Electricity deregulation in NSW

A light globe sits on top on an electricity bill

The NSW Greens will try to reverse electricity price deregulation laws in NSW, which take effect today, when Parliament returns from its winter break in August. 

Last Friday the NSW government was forced to introduce the changes as a regulation after its bill faced opposition in the upper house by Labor, the Greens and the Shooters and Fishers party, which holds the balance of power in the upper house.

Up until today, 35 per cent of electricity consumers were still on a standard contract, which had a regulated price set by the Independent Regulatory and Pricing Tribunal (IPART). However, the new laws mean those consumers will now be transitioned to market contracts. 

Consumers on standard contracts will move to a transitional rate for one year, which is 1.5 per cent lower than the current regulated price. And the following year, price rises will be restricted to an increase of CPI or less. But as of 1 July 2016, all consumers will be required to shop around for a market contract.

Deregulation in NSW now brings the state in line with Victoria and South Australia, both of which have already fully deregulated their electricity markets.

As for whether the move will benefit consumers with reduced electricity prices, the verdict isn’t out yet. 

While CHOICE welcomes any move to reduce electricity prices, various reports have found that price deregulation in Victoria, the first state to fully deregulate its electricity market, haven't resulted in any overall benefit to consumers in terms of price. 

In addition, retail costs only account for a small proportion of the average electricity bill. In NSW, the main driver of cost increases over recent years has been in the infrastructure costs such as poles and wires.

NSW Minister for Resources and Energy Anthony Roberts says electricity deregulation could save the average household $300-$400 a year. However, NSW Greens MP John Kaye isn’t so sure and says that after the transition period, bills will rise rapidly. 

For consumers, finding the cheapest energy retailer is very hard work. A CHOICE survey in 2012 found a third of consumers who had joined their retailer in the previous three years said they had tried to compare providers but found it too difficult.

The best way for consumers to compare energy offers is to use the Australian Energy Regulator’s website Energy Made Easy.



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