New South Wales is moving to deregulate its energy market in a move aimed at lifting competition and lowering electricity prices.
The State Government announced in April the Independent Pricing and Regulatory Tribunal (IPART) would lose its power to set electricity prices from July 1.
NSW Energy Minister Anthony Roberts claimed opening up pricing to the free market would encourage competition and lead to lower power bills for families.
“Removing regulation will further increase competition as electricity retailers lower prices and offer new deals to attract new customers,” Mr Roberts said.
“For the first time in 15 years NSW electricity customers with regulated prices will see a reduction on their bill.”
Those who have not switched to a competitive market deal by July 1 will automatically be transferred to a transitional tariff that will be 1.5 per cent lower in the first year compared with the former regulated price.
“IPART will continue to play a role monitoring the NSW electricity market and analysing competition indicators and will report back to the NSW government each year for a three year period,” Mr Roberts said.
The government has promised more than 1 million customers currently on a regulated price would see a reduction in their bills from the reform, but the Electrical Trades Union (ETU) has questioned the need for the change.
ETU secretary Steve Butler said the current system had not prevented suppliers charging less than the regulated price for electricity, but scrapping the regulation would mean an upper limit would no longer apply.
Butler has pointed to Victoria and South Australia, which both have deregulated energy markets, to argue against the government’s plans.
“The federal government’s own Australian Energy Regulator has found that the deregulated energy market in South Australia has resulted in the highest electricity prices in Australia, with average household power bills now reaching $2335 a year, and the number of complaints soaring to 50,655,” Mr Butler said.
“The situation has become so bad there that two in every five South Australian electricity customers are now on hardship programs.
“In Victoria, average annual electricity bills are the same as in NSW, however the price gap between cheapest and most expensive contracts is the largest in the country, showing vulnerable consumers are suffering the most from unfair power prices.”
Mr Butler said the current regime provided a safety net for all electricity consumers by keeping price rises in check.