If you haven’t switched energy deals in the last year or two, there’s a chance you’re on one of the highest priced deals in the market, called a standing offer.
The Australian Government has promised to change this and slash up to $832 per annum from electricity bills.
The Government has given retailers until 1 January 2019 to voluntarily cut prices.
Retailers must provide a default offer from 1 July 2019. A default offer has a capped price determined by the Australian Energy Regulator.
This default offer will replace the current standing offer, which is sometimes referred to as a loyalty tax, because it penalises those who stay with their retailer and don’t ask for a better deal.
State and Territory Ministers have agreed on the need to develop a comparison rate by which all offers would be measured. This issue will again be considered in December 2018.
Ministers also agreed that the Australian Energy Market Commission should investigate the impacts of the default offer on both competition and customers.
It is still uncertain if the Government’s plan will be successful in delivering the promised results. An analysis by the Australian Competition and Consumer Commission (ACCC) showed the annual savings from the default offer would be between $105 and $165, falling far short of what is claimed by the Government. The ACCC also showed that only 10 to 15 per cent of customers are on standing offers, which means most households will not be better off.
On 14November 2018, the Greens called for the establishment of a Select Committee into Fair Dinkum Power. The Committee will look into matters such as the impacts of privatisation and regulatory reforms which would empower energy consumers, including low income households and renters. The Committee is due to report in June 2019.
Another reform necessary to cut energy costs is to recognise energy as an essential service and exempt it from GST. This would align energy with water, which is GST-free because it is considered an essential service.
The addition of GST to energy bills also means that those who live in areas with a higher daily supply charge pay more GST.
In 2017, a proposal to exempt electricity from GST was voted down with arguments that too much revenue would be lost.
THE VOICE will continue to update readers on energy policy.