The Australian Competition & Consumer Commission’s preliminary report into the electricity market highlights its “significant concerns” about the market’s operation, which it says has directly led to “serious problems with affordability” for both households and businesses.
The ACCC’s Retail Electricity Pricing Inquiry preliminary report follows over 150 submissions made since April, and public forums in Adelaide, Brisbane, Melbourne, Sydney and Townsville.
For all states other than South Australia, the major cause of higher customer bills was a significant increase in network costs, according to the report. Meanwhile, in South Australia, the major cause of bigger energy bills was generation costs.
“It’s no great secret that Australia has an electricity affordability problem,” ACCC chairman Rod Sims said.
“What’s clear from our report is that price increases over the past ten years are putting Australian businesses and consumers under unacceptable pressure.”
Household electricity prices have increased 63% above inflation since 2007/08, the report states.
“Consumers have been faced with increasing pressures to their household budgets as electricity prices have skyrocketed in recent years,” Sims said.
“The main reason customers’ electricity bills have gone up is due to higher network costs, a fact which is not widely recognised. To a lesser extent, increasing green costs and retailer costs also contributed.”
Sims expressed concern over the ‘big three’ vertically integrated electricity businesses – AGL, Origin and EnergyAustralia – having a combined market control of more than 60% in NSW, South Australia and Victoria.
He also said the electricity market is an overly complex one for consumers to navigate.
“Consumers and businesses are faced with a multitude of complex offers that cannot be compared easily,” he explained.
“There is little awareness of the tools available to help consumers make informed choices or seek assistance if they are struggling to pay their electricity bills.
“Many of these issues arise from unnecessarily complex and confusing behaviour by electricity retailers, and in some case this appears to be designed to circumvent existing regulation.”
The Commission’s full report is available on its website.