Our Two Cents: Prices still rising, action still needed

Most households will be impacted by a rise in energy prices from the beginning of this year. If you live in a city, it is likely that you will see advertising for a bogus energy ‘pay on time discount’ in your next trip from A to B. How is this still the case?

Consumer advocates know that pay on time discounts are bogus, regulators have outlined why they are bogus[1], reviews have recommended a regulatory response to address the practice[2] and even Federal Minister for Energy Josh Frydenberg agrees that aspects of discounting are bogus. And yet…household bills continue to rise and energy retailers are still spending a fortune of their customers money to plaster advertising for their latest bogus discount on billboards, bus stops and the backs of taxis.

We agree with the point made by David Blowers, Energy Fellow at the Grattan Institute, in his recent piece for The Conversation. The spotlight on energy issues in 2017 has not resulted in any significant issues being resolved or material improvements for households.

Households need, and want, real action. Policy solutions such as the Basic Service Offer recommended by the Independent Review of The Electricity and Gas Retail Markets In Victoria[3] (The Victorian Review) last year are yet to be thoroughly considered and investigated for their benefits. We consider that a Basic Service Offer would resolve a range of issues including the practice of retailers charging their customers for misleading advertising, otherwise known as “marketing”.

Capping costs incurred by households for failing to meet offer conditions to an amount not higher than the reasonable cost to retailers for a late payment was another recommendation of The Victorian Review. Again, this would address a substantial part of the problem of bogus discounting.

Discounting is of course only one of many issues, but Consumer Action is focused on it for a reason. As this bogus practice intensifies, it results in those in payment difficulty being slugged with huge artificially inflated penalties for paying only a day or two late for their essential service bill. As anyone who’s ever been a bit short of cash will know, sometimes you just need a few extra days to have the money to pay.

Band aids such as compulsory notification of the end of a fixed benefit period and the establishment of another regulatory body to monitor the Nation Energy Market’s supply security will not bring prices down immediately. Lukewarm responses with inflated political rhetoric is a failure for struggling households.

This year we will maintain our focus on the need for changes to an essentials service delivery system that has failed to act in the interests of consumers. We will urge politicians, regulators and industry to make changes that will result in fairer energy prices for households sooner rather than later. Consumer Action particularly encourages the Victorian Government to implement the recommendations of The Victorian Review as a priority to start 2018.

[1] Essential Services Commission 2017, Victorian Energy Market Report 2016-17, 21 November and Australian Competition & Consumer Commission 2017, Retail Electricity Pricing Inquiry: Preliminary Report, 22 September

[2] Thwaites, Mulder & Faulkner 2017, Independent Review of The Electricity and Gas Retail Markets In Victoria, August

[3] Ibid.

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