Dr Gill on Simplifying Tariff Comparisons

The following piece is an excerpt from a piece by Dr. Martin Gill, CFA’s representative on a number of Standards Australia Technical Committees on energy. 

Retailers should be required to provide sufficient information on bills (and tariff contracts) to ensure consumers can easily compare tariffs. It is also recommended a review be undertaken to determine how to simplify consumer access to their historical electricity use.

The ACCC’s Retail Electricity Pricing Inquiry shows over the past decade electricity prices have risen by 64%. What this figure fails to reveal is many consumers are making poor energy choices and now pay significantly more.

Access to electricity is an essential service. Until recently the Government regulated the price. There
was no choice and all consumers paid the same price. Then everything changed. The local electricity company was sold or leased and consumers could choose who billed them for their electricity use.

The biggest change for consumers was Governments stopped regulating the price of electricity. Retailers were free to offer a range plans including both high and low prices. Consumers choosing the wrong tariff paid significantly more than they should.

St Vincent de Paul describes the problem: ‘Significant price dispersion becomes a serious issue
when customers do not have the tools or the ability to assess available offers.’

Without the tools or ability to compare tariffs complacent and/or naïve consumers continue to
make the wrong energy choices. Providing consumers with both the tools and ability to compare tariffs will enable more to lower their electricity costs.

Further discussion of the proposed changes are included in a submission to the Australian Competition and Consumer Commission which is available here.