An independent bi-partisan review of Victoria’s electricity and gas retail markets has been released, examining the operation of the state’s electricity and gas retail markets and providing recommendations to improve outcomes for consumers.

The independent review panel comprised John Thwaites, who served as Deputy Premier of Victoria from 1999 to 2007, Terry Mulder who served as Minister for Public Transport and Roads from 2010 to 2014, and Patricia Faulkner AO, former Secretary of the Victorian Department of Human Services and Director of Consumer Affairs.

The  Independent Review into the Retail Electricity & Gas Retail Markets in Victoria found that Victorian households are paying much higher prices than official estimates; on average around 21 per cent per year more for their electricity than the cheapest offer available in the market.

A significant contributing factor in high energy prices is the retail charge – the component of the total bill that covers the retailer’s costs and profits from selling energy. The average retail charge for a typical customer using around 4,000 kWh per year is now $423 before GST (or more than 10 cents per kWh), around 30 per cent of the household bill.

The review found three main factors for this market failure:

  1. The cost of competition
  2. The structure of the market
  3. The practices of the industry

The review examined whether the electricity and gas retail markets are operating in the best interests of Victorians, and provides eleven recommendations aimed at getting a better deal for customers, which are as follows:

  • Basic service offer: require all retailers to provide an offer that is not greater than the regulated price
  • Abolish standing offers
  • Marketing information on prices to be easily comparable
  • Contract periods, practices and variations to be clear and fair
  • Promoting access to smart meter data to assist customers to manage bills and increase energy efficiency
  • Protecting low income and vulnerable customers with increased assistance and market awareness
  • Brokerage and collective bargaining on behalf of low income and vulnerable customers
  • Monitoring the market via the Essential Services Commission (ESC)
  • An energy market code based around the customer following an ESC review
  • Full coverage of new energy services via expanded powers to the Energy Water Ombudsman Victoria
  • Request COAG Energy Council to review the structure of the energy market to ensure it’s working in the long-term interest of customers

The Victorian Government will formally respond to the review by the end of 2017.

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