Our Two Cents: How to fix the energy price gouge – give us a basic service, without the frills

Gerard Brody, CEO – Consumer Action Law Centre

All Victorians want is to be able to turn the lights on, cook dinner and keep the kids warm at night, but power companies have taken the most basic of public services and turned it into their cash cow.

From July, all Victorian energy account-holders will be given fifty dollars when they register with the Government’s energy switching website, Victoria Energy Compare. The theory is that this will nudge us into checking our rates and shopping around for a better deal.

Power companies regularly gouge us. Power should be one of the most basic services to buy, but the companies fudge their figures, confuse us and then trick us with fake discounts that mean nothing. When you see 20%, 30% or 40% off – they’re pulling the wool over your eyes. They set their own rates, so 20% off at one company could be the same as 30% off another – ridiculous!

Years ago, power companies were banned from charging late fees – recognising the fact that these fees were unfair and were hurting Victorian families who were struggling the most. So, what did the power companies do? They created the “pay on time” discount – the same thing under a different name to evade the law.

Many of us will have one bill within the year that we can’t pay on time. It might be because the power, gas, water, credit card, mortgage and rates bills are all due the same week. Or maybe you changed jobs, had your hours reduced, or, worse, lost your job, so the cash isn’t there to pay. If the power bill is paid late, the late fee that was meant to be banned years ago hits you through losing your fake “discount”.

All this talk of “switch to save” simply hides the deep dysfunction of Victoria’s energy market. This dysfunction was recognised in a bipartisan review led by former Deputy Premier John Thwaites in 2017. Thwaites and his colleagues recommended real reforms that would put power back into our hands and ensure the retailers play fair. The recommendations included doing away with fake discounts, improving transparency, and, top of the list, allowing Victorians to buy basic and affordable power without the ridiculous frills and confusion power companies have been gouging us with for years.

Think of it as the Home Brand of power bills – we just want the basics: heating, cooling and lighting.

This change would require power companies to offer a basic, no frills product at a price that is fair, stripped from hefty costs associated with marketing and promotions. Competition could then work as it was always intended—by encouraging energy retailers to offer an even better price to get our custom. That’s the big policy switch we need to flick, to ensure the essential energy market serves people first.

In an election year, energy policy is one area we really don’t need competition – that’s why all parties need to support a mandatory basic service offer, so all Victorians have a fair price for our essential energy service.

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