NSW Premier Barry O’Farrell and Minister for Resources and Energy Anthony Roberts today announced the removal of retail price regulation from the electricity market, which will deliver greater competition and deliver lower electricity prices for many NSW households and businesses from 1 July 2014.
Mr O’Farrell said more than a million customers currently on a regulated price would see a reduction in the face value of their electricity charges – the first fall in 15 years.
“The NSW Government is committed to doing everything it can to reduce the cost of living pressures on families across NSW,” Mr O’Farrell said.
“Today’s announcement will ensure there is full and robust competition in the retail electricity market, leading to lower power bills for families.
“We are removing one of the main barriers to lower prices – from now on retailers will need to work harder and offer better deals to win customers.
“I’m delighted the NSW Government has not only brought an end to Labor’s double-digit electricity price rises, but we’re now able to deliver real reductions in bills for families.
“This comes on top of our $247 million assistance package to help customers to pay their bills, through the increased Low Income Household Rebate and the Family Energy Rebate,” Mr O’Farrell said.
In late 2013 the Independent Pricing and Regulatory Tribunal (IPART) and the Australian Energy Market Commission (AEMC) found that the NSW electricity market is competitive and that regulation is unnecessary. The AEMC found that regulation may be inhibiting price competition.
Mr Roberts said by removing price regulation the NSW Government is empowering NSW customers with the ability to make the best choice for their individual circumstances.
“Removing regulation will further increase competition as electricity retailers lower prices and offer new deals to attract new customers,” Mr Roberts said.
“In its report the AEMC highlighted that customers could save $300 to $400 per year from an average household bill of $2,500, simply by taking advantage of the deals offered by electricity retailers to customers on competitive market contracts.
“Around 60 per cent of NSW households and small businesses, almost 2 million customers, have already made the switch from a regulated electricity price to a competitive market contract.
“Now the remaining 1.3 million customers are encouraged to have a look at the deals available on the market and take control of their electricity bills.”
Mr Roberts said the decision to remove retail price regulation follows the NSW Government’s announcement in February that families and businesses can look forward to a further easing in power costs from 1 July 2014 as a result of the NSW Government’s reforms to the energy sector.
“The network businesses – Ausgrid, Endeavour Energy and Essential Energy – have submitted investment proposals to the Australian Energy Regulator that will ensure the reliable supply of electricity while keeping bill rises below CPI,” Mr Roberts said.
“Already some $4.3 billion in unnecessary future infrastructure spending and operating costs by the network have been identified and avoided. These are costs that will no longer be passed onto customers as network costs account for about half of household electricity bills.
“For the first time in 15 years NSW electricity customers with regulated prices will see a reduction on their bill.
“Finally NSW Labor’s legacy of soaring electricity prices of up to 22.4% per year is behind us and we can get on with the job of delivering increased competition in the market which will lead to better deals for NSW families and businesses.
“From 1 July 2014 those customers who have not switched to a competitive market deal will automatically be transferred to a ‘transitional tariff’.
“For most households on a transitional tariff, their bill will be 1.5% lower in the first year compared with the former regulated price, however many market offers may be even cheaper.
“Importantly, the removal of retail electricity price regulation will not change access to energy rebates, protection laws or the quality of electricity supply.
“IPART will continue to play a role monitoring the NSW electricity market and analysing competition indicators and will report back to the NSW Government each year for a three year period.”
Households and small businesses are encouraged to shop around for the best deal by making a free comparison between retailers on the Australian Energy Regulator’s website www.energymadeeasy.gov.au