Consumer Action Law Centre has welcomed the Federal Government’s Energy White Paper, which it believes is a significant improvement from the draft. The Centre said that it was pleasing that the White Paper included analysis about when and how markets can deliver for consumers, but that the Government has oversold the benefits of price-deregulation and competition in Victoria.
Gerard Brody, Director Policy & Campaigns, welcomed the focus of Minister Ferguson’s speech at yesterday’s launch of the White Paper. ‘It’s especially pleasing that the White Paper contains analysis of characteristics of well-functioning markets. We were particularly pleased to hear the Minister say that “the policy framework set out in the Energy White Paper is a commitment to competitive and well-regulated markets that operate in the long-term interests of consumers and the entire nation.”’
‘Rather than just assuming that a market-based approach will deliver positive outcomes, it seems that the Government acknowledges that there are a number of pre-requisites to well-functioning markets, including identifying when government intervention is required to facilitate good market outcomes.’
Mr Brody said it was significant that the White Paper acknowledged the importance of consumer participation and that consumer engagement was necessary for a well-functioning market.
‘With time of use pricing foreshadowed, our market is set to become more complex for consumers. Policy makers and the energy industry need to prioritise simple and effective tools to help consumers manage usage—including technologies that manage energy-intensive appliances (direct load control)—rather than just rely on punitive pricing at periods of peak consumption which can hurt the most vulnerable.’
Mr Brody also warned that ‘customer churn’ or switching alone does not amount to active consumer participation in energy markets.
‘The White Paper holds up Victoria as an example of effective competition. Our experience is that consumers still have real problems participating in the energy market here. While there may be many different deals on offer, and savings to be made, analysis from the Victorian Essential Services Commission demonstrates that savings are highly conditional—consumers may have to pay by direct debit which might be difficult to manage, and if bills aren’t paid on time, any savings may be lost,’ said Mr Brody.
‘It is true that around a quarter of all Victorians switch providers each year—however, this is less a sign of effective competition, and more an indicator of the effectiveness of door-to-door marketing, a sales channel that is inherently anti-competitive as consumers are only provided with one offer which they are pressured to accept on the spot.’
Mr Brody said the Federal Government’s support for the development of a national energy consumer advocacy body was welcome. ‘It is clear that consumers need better access and capabilities to constructively participate in regulatory decisions.’
Consumer Action is calling on Federal and State Governments to work together to action some of the recommendations from recent reviews of the energy market, including the network regulation rule change, and the review of appeals processes which found them highly biased towards industry. It also called for Governments to increase efforts to protect consumers from unfair contracts, marketing and retail pricing strategies through transferring responsibility for retail consumer protection to the Australian Energy Regulator.
‘We very much agree with calls for national regulators to be effectively resourced and empowered to monitor market outcomes and take action to protect consumers,’ said Mr Brody. ‘State Governments should adopt the National Energy Customer Framework and take steps to maintain protections not included in that regime.’