Low average increases in NSW electricity prices below CPI were announced today, but the Public Interest Advocacy Centre (PIAC) believes prices are still too high.
‘We mustn’t forget that very high electricity price rises have placed people under considerable financial pressure in recent years,’ said Carolyn Hodge, Senior Policy Officer, at PIAC.
‘PIAC is glad today’s average increase of 1.7% is modest. It is also good news that consumers in rural and regional areas, who have been paying the highest electricity prices in NSW, will see a small reduction in electricity prices. However, the persistent high price of electricity contributed to over 23,000 electricity disconnections last financial year and the numbers are trending up dramatically,’ Ms Hodge said.
At a time of high electricity prices, PIAC has concerns that consumers are paying a ‘Customer Acquisition and Retention Charge’ to enhance competition in the electricity market. NSW consumers will pay between $50-$86 per year, on average, for marketing and discounting offered by electricity retailers, under the determination handed down by the Independent Pricing and Regulatory Tribunal (IPART) today.
‘Take this charge away and many NSW consumers would be celebrating the fact that their electricity bills were going down by a significant amount,’ said Ms Hodge.
This charge is designed to improve competition, and PIAC agrees that competition can provide value where retailers offer cheaper prices and innovative products to attract customers. However, PIAC questions the logic behind making customers pay higher prices now in the hope that retailers might reduce them over time through discounts.
‘The benefits of competition should be encouraged. But artificial incentives for retailers place the burden of higher prices on NSW consumers—while the rewards go to the retailers,’ Ms Hodge said.
The NSW Government provides a range of rebates and assistance to help low-income households and families cope with electricity bills. PIAC is very concerned that the value of this assistance is being eroded through the charges consumers are paying to encourage retailers to compete.