The ACCC has released new figures showing that, due to electricity pricing falling by almost 9 per cent since the middle of last year, there is $900 million in potential savings for households in eastern and southern states.
Retail electricity offers now available to households in New South Wales, Victoria, South East Queensland, South Australia and the Australian Capital Territory are, on average, 8.8 per cent lower than they were in June 2020, which equates to an average annual household saving of $126.
Going by the data from ACCC, the total annual savings would amass about $900 million if all customers in National Energy Market regions were to benefit from retailers lowering their pricing for existing plans, or make savings by switching to better offers, compared to June 2020.
But as the ACCC warns, electricity retailers must comply with new energy market laws and pass on reductions in their costs to existing customers.
“There are two ways that households and small businesses can get the hip-pocket benefit of recent reductions in retailers’ costs: by changing to a new, cheaper plan; or, by waiting for their retailer to lower the rates on the plan that they’re already on,” ACCC Chair Rod Sims said.
“While we encourage consumers to cash in on the available savings by switching to a better deal, new laws require electricity retailers to pass on cuts in the wholesale cost of electricity.”
There’s a law that makes sure they do, too; the new Prohibiting Energy Market Misconduct (PEMM) laws came into effect in June 2020, forcing electricity retailers to keep their prices in line with their costs of procuring electricity. The penalties for non-compliance include fines of up to $10 million or 10 per cent of the company’s turnover per breach.
“A significant increase in generation capacity, attributed to renewable generation and falling fuel costs, has led to much lower wholesale electricity costs and it’s vital that all Australians now see the savings,” said Sims.
“Prior to this, we had a decade of sustained electricity price increases that placed unacceptable pressure on households and small businesses.
“The ACCC is now investigating whether electricity retailers’ current prices, including to their existing customers, are in line with recent wholesale price reductions, and if electricity retailers haven’t passed on the savings to consumers as required by law, they can expect to hear from us.
“We also expect further significant price reductions from retailers over time, as the reductions in wholesale spot prices flow through to retailers’ contracting positions.”
Unsurprisingly, there have already been some bad guys who haven’t been passing on their savings to their customers, which goes against these new laws, and they have been approached by the ACCC. Those non-compliant electricity retailers will be closely monitored by the ACCC over the coming months, along with many others.
A consumer’s electricity bill is largely made up of wholesale and network costs incurred to the retailer. Now that wholesale spot market prices have decreased significantly in all National Energy Market regions in 2020-21, this will come down for the consumer too.
Compared to 2019, average wholesale spot prices have decreased by 58 per cent in Victoria, 49 per cent in South Australia, 43 per cent in New South Wales and 39 per cent in Queensland.
“Spot prices have been significantly lower for a year now, so retailers should be experiencing significant reductions in their costs already,” Sims said.
“While the ACCC will be enforcing the new laws, we also urge people who haven’t seen their bill come down to contact their electricity retailer and ask to be put on the best offer for their circumstances,” said Sims.
With our increase in use for electronic goods and services over the past 12 months, this is good news for households, businesses and retailers alike.
