AER decision a missed opportunity to reduce energy bills

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May 1, 2019

PIAC’s Energy + Water Consumers’ Advocacy Program (EWCAP) has said that the Australian Energy Regulator’s (AER) final determination on Default Market Offer (DMO) prices, issued this week, is a lost opportunity to deliver fairer retail bills for NSW consumers.

‘While we welcome any measures that help to address the unfairly inflated bills that over 400,000 standing offer customers in NSW face,’ said Craig Memery, EWCAP Team Leader, ‘the DMO determination doesn’t provide the back-stop consumers need to stop them being overcharged for energy.’

The recent ACCC retail price inquiry identified a range of issues with retail pricing practices that are leaving hundreds of thousands of consumers paying more than they need to. This report recommended abolishing standing offers, identified as the most unaffordable and unfair retail offers, and replacing them with a DMO that more closely reflected an efficient and fair price for electricity.

Under this week’s determination, intended to deliver on the ACCC recommendations, DMO prices will be set at the mid-point (50th percentile) between the median market offer and median standing offer in each distribution zone. By including standing offers, recognised as being unjustifiably high, this determination means many people will still pay much more than they should, and will lock in high margins and profits for retailers.

‘The AER has missed an opportunity to more closely align with the Victorian Default Offer process which will help ensure fairer bills for Victorian consumers,’ said Craig Memery.

‘The risk is people will see the DMO as a fair or cheap price. It isn’t, and it won’t save them from having to shop around to get one.’

Media contact: PIAC Media and Communications Manager, Gemma Pearce – 0478 739 280

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