Tuesday, 18 June 2019 11:08

New electricity code to enforce compliance by energy retailers

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New electricity code to enforce compliance by energy retailers Image Stuart Miles at FreeDigitalPhotos.net

Energy retailers in South East Queensland, New South Wales and South Australia must comply with obligations under a new Electricity Retail Code which will come into force from 1 July this year.

The competition regulator, the Australian Competition and Consumer Commission, has just released a guide detailing how retailers in these regions should apply the new code in relation to their customers.

The ACCC says the code introduces a cap on "standing offer" prices that are often excessively high, to automatically bring down the cost of electricity to customers on these offers, “many of whom cannot or do not access alternative market offers”. The cap will be set annually by the Australian Energy Regulator.

The code also mandates that any prices and discounts must be calculated and advertised against an independently set benchmark known as the "reference price", meaning 20% off with one retailer is also 20% off the same price as another retailer in the same region.

And the code also bans “conditional headline discounting”, meaning that conditional discounts must not be the most conspicuous price advertised, and requires all conditions to be clearly stated.

“These new rules, based on recommendations by the ACCC, increase transparency in advertising of electricity offers, and put consumers in a stronger position by enabling them to trust retailers’ advertised discounts and find a better deal,” ACCC commissioner Cristina Cifuentes said.

“Current discounting practices confuse consumers and large discounts off inflated standing offers do not always result in lower electricity prices for consumers.”

The ACCC’s March 2019 report found prices and bills had been increasing despite a steady rise in advertised discounts, because retailers generally advertise discounts from their own standing offer rates, making it difficult for consumers to compare offers.

In addition, the report said that retailers often advertise large conditional discounts, with many consumers ending up paying a much higher price when those conditions are not met – and with the "penalties" providing an excessive benefit to retailers.

“I urge consumers to review their electricity deals after 1 July, and to shop around for the best deal,” Cifuentes said.

The ACCC guide explains:

  • which retail electricity offers are covered by the code;
  • how the cap on standing offer prices works;
  • how price and discounts must be compared to the benchmark (or "reference price");
  • other regulatory requirements that operate concurrently with the code; and
  • the consequences of non-compliance with the code.

The ACCC says it will enforce the code and monitor compliance, and as part of its ongoing monitoring of electricity prices, the Commission will report on the effects of the code on the retail market and whether consumers are generally receiving a better deal.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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