Energy consumers calling for fairer pricing system

News posted on 05.08.2014

Consumeraction.org.au has reported (31/07/2014) on consumer concerns that energy companies can increase prices at will in a currently unfair energy market place.

A past proposal from Consumer Utilities Advocacy Centre (CUAC) and Consumer Action Law Centre sought to ban energy retailers from raising a consumer's tariff mid contract. This was rejected by the AEMC in favour of the current system.

Currently, a consumer looking for a better deal can sign a multiyear deal with a provider only to have a price increase before the next bill.  The discount offer becomes meaningless even though a contract has been signed.

Gerard Brody from Consumer Action Law Centre says that it is unfair that energy companies are able to increase prices at will and that a contract should stand for something.  He would like to see the current system fixed.

AEMC has put forward a rule that would require energy retailers to reveal any possibility of future price changes to a customer before a contract is signed.  They argue that a total ban on price increases during a contract would lead to less choice of energy plans.

Mr Brody dismissed this argument saying that the number of deals means nothing if price can be raised at any time.  He said that the deal is not worth the paper it's written on.

The AEMC decision is in a draft phase so there is a current opportunity to implement changes to create a fairer energy market place.

The AEMC's proposal would mean:

There will be no point in shopping around for the best price.

Customers will continue to be confused on the term 'fixed' and whether it applies to a time limit or price.

Energy retailers will be able to set prices at a below market level to initially attract customers only to have prices increase once a contract is signed.

Jo Benvenuti from CUAC highlighted that a recent survey found that 94 per cent of respondents believe that energy retailers should not be able to raise prices during the period of a contract.

Ms Benvenuti would like to see a rule change that would create long term benefits for energy consumers.  She said that Australians battling with ever increasing household expenses deserve better.