Default Market Offer Price draft determination

PIAC lodged a submission in response to the AERs draft determination on the Default Market Offer (DMO). PIAC strongly supports the concept of default pricing as a crucial means of ensuring that all consumers have access to a fair price for an essential service, and providing consumers and the market with valuable information on the efficient cost of providing electricity as an essential service.

PIAC disagrees that an ‘efficiently priced’ DMO would undermine competition or lead to worse outcomes for consumers, and strongly recommends that the AER implement a DMO that guarantees all consumers are protected by access to a fair price. Specifically:

• That in the first year, the DMO is calculated by determining the median of available market offers only.
• That there is a commitment for the next DMO to be determined on a ‘bottom up’ basis, and reflect the efficient cost of providing an essential service
• That all discounts are required to be calculated as a dollar amount in relation to the DMO
• That the DMO be provided as a price, as well as an indicative bill amount, or be provided as low, medium and high usage indicative bill amounts.
• The draft Victorian Default Offer represents, in both principle and practical application, a more appropriate and effective model for a default price mechanism.