Media release: Energy debate must address the real drivers of the unnecessary electricity price increases

The Consumer Action Law Centre has welcomed comments made by Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims warning that the energy reform debate must address the real drivers of the unnecessary electricity price increases in Australia, and not be distracted by side-issues such as regulator governance.

Catriona Lowe, Co-CEO of Consumer Action, said that consumers expected governments and regulators to work together to reduce the impact of ongoing electricity price increases.

‘The existing energy market reviews, including the Senate Select Inquiry into Electricity Prices and the upcoming meeting of the Council of Australian Governments, provide significant opportunity to refocus our energy markets on the needs of everyday consumers who are struggling with prices that appear to spiralling out of control’, said Ms Lowe.

‘It is widely accepted that a significant driver of ongoing price rises is the current network pricing arrangements which are unfairly tipped in favour of the industry. Add to that the fact that energy businesses can so easily and successfully appeal decisions of the independent regulator, and it’s clear that the problem is not with the regulator but the system it operates within’, said Ms Lowe.

In his speech today to the Energy Users Association of Australia, Mr Sims rejected proposals from some state governments to separate the Australian Energy Regulator (AER) from the ACCC.

Ms Lowe said it was not only a distraction but that it was wasteful and potentially dangerous for governments to pursue separation of the AER from the ACCC.

‘There are parallels in the work of the two regulators—both the ACCC and AER monitor monopoly markets, protect consumers from poor business practices, and promote competition, so having them work closely together means they can share market knowledge, draw on a great pool of experience and share resources.

‘There are also obvious cost savings—existing arrangements mean not only sharing of staffing, but that the AER has offices in Adelaide, Brisbane, Canberra, Sydney and Melbourne.’

Ms Lowe said that when regulators focus narrowly on one industry, they are at significant risk of becoming ‘captured’ by industry interests. A broader view across different industries is likely to keep the regulator independent and focused on the interests it exists to serve—that of consumers.

‘We strongly agree with Mr Sims when he says “it is difficult to see how making the industry regulator less independent and more responsive to industry can be in the long term interest of electricity consumers”. What’s needed is a strong focus on fixing the rules and regulations that inhibit the AER from making decisions in consumers’ interests.’

‘Governments should also ramp up efforts to protect consumers from unfair contracts, marketing and retail pricing strategies—this is likely to be achieved by states handing over responsibility for retail consumer protection to the national regulator.  State governments could do this and still retain current protections that are not included in the national energy customer framework,’ said Ms Lowe.

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