22 March 2019
Andrews Government legislation introducing a fair price for electricity just passed by State Parliament strengthens the interests of consumers over power companies and will save many households hundreds of dollars a year, said anti-poverty organisation the Brotherhood of St Laurence.
‘This is an extremely important reform, which will provide a guaranteed, fair price for energy, that many Victorians will benefit from,’ said Conny Lenneberg, Executive Director of the Brotherhood of St Laurence, today.
‘Victorians, and in particular those on low incomes, have been hit hard by rising energy costs and deals that come with strings attached, such as losing discounts if they don’t pay strictly on time, and being hit with price rises during the term of the deal.’
The legislation will abolish the current system of ‘standing offers’ for household electricity and empower the state’s independent regulator, the Essential Services Commission (ESC), to determine a default fair price for electricity, called the Victorian Default Offer. The standing offers are more expensive than companies’ discounted plans, which households need to shop around for, and many of which have conditions attached.
Ms Lenneberg said: ‘The Victorian Default Offer will really help the households we see who are struggling with high energy prices, particularly those who find the market too difficult to navigate. ‘From our services and research we know people are struggling to pay bills and far too often go without other necessities such as hot water and winter heating. People should not be forced to make these choices for what is, after all, an essential service.’
‘The new system guarantees a fair price, and won’t be subject to the arbitrary price hikes many consumers have faced. The households we work with will welcome the certainty of knowing the independent umpire (ESC) has set the price.’
About 145,000 households on the standing offers will be automatically moved to the Victorian Default Offer fair price by their electricity companies in July. ESC analysis shows these households will save between $390 and $520 a year, on average. However, other households paying very high rates will not be moved automatically.
Ms Lenneberg said: ‘If you took up a discounted electricity plan in the past it may well have lapsed, meaning you are now paying more for your power. In this situation there is no guarantee that consumers will be offered the fair price by their electricity company. ‘There are hundreds of thousands of Victorians on these expired offers paying too much for their electricity.
‘We need to make sure all households know about the Victorian Default Offer, so they can call their retailer and ask to go onto it, or if their existing discount plans expire then they should default to either the fair price or a better market offer.’
Damian Sullivan, senior manager for energy research at the Brotherhood, said: ‘We see how hard it can be to hunt down the best deal in a confusing and complicated retail energy market that has allowed consumer rip-offs. The Government needs to ensure consumers can easily access the new fair price because electricity companies aren’t going to do it for them.’
Produced by the librarians at the Brotherhood of St Laurence in Melbourne, Australia