Consultation begins on default market offer

default market offer, meters

The Australian Energy Regulator (AER) has today commenced consultation on the development of a default market offer after accepting the recommendation detailed in the ACCC’s Retail Electricity Pricing Inquiry (REPI) report to adopt one.

AER chair Paula Conboy says the position paper released today is an important first step in gaining input from stakeholders as part the AER’s process for developing default market offer prices.

“In setting default market offer prices, our aim will be to provide fairer prices for standing offer customers, while ensuring we continue to promote competition and innovation in the retail markets,” Ms Conboy says. “An important part of our process will be listening to the views of stakeholders through an open and consultative process.

“Standing offer prices are generally applied to inactive consumers who don’t, or can’t, shop around. They are set by electricity retailers and, as pointed out in the ACCC report, are unjustifiably too high.

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“Default market offer prices will replace standing offer prices to ensure consumers who are currently on standing offer contracts will have access to fairer prices.

“Default market offer prices will also be an input into the development of reference bills that will be used by retailers to calculate and advertise their discounts. This will make it much easier for consumers to compare offers between retailers and find better deals.”

Stakeholders are invited to submit written responses on the issues and questions identified in the position paper by December 7, 2018.

The default market price and reference bill will be determined by April 30, 2019 for a commencement date of July 1, 2019.

Just yesterday the AER announced it had approved the 2019 tariff proposals from Victoria’s electricity networks, with four out of five resulting in an electricity price increase.

Background

The default market offer is an electricity tariff set by the AER stipulating a maximum price retailers can charge for electricity. It aims to serve as a form of safety net for customers who stay with their electricity retailer to ensure they are not exploited by standing offers.

Electricity prices have been a key campaigning point for the Morrison Government.

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