Published: November 17, 2008 - 02:48 PM
The Victorian government is removing the gas and electricity price capping system from January 1, 2009.
Previously, the government has placed a cap on the maximum the Victorian electricity suppliers and gas providers were allowed to charge customers.
Victorian energy suppliers, such as AGL, TRU Energy and Origin, will now be uninhibited in what they can charge Victorian consumers. Consumers will now have to rely on the market to be effectively competitive in order to get the cheapest prices.
As a result of the changes, the Victorian Government has introduced new rules to make the electricity suppliers and gas companies in Victoria more transparent. Energy companies will now be obliged to publish a range of their product and pricing on the Essential Services Commission website.
Peter Batchelor, the Energy and Resources Minister, said that the increase in price visibility “will make it easier for consumers to compare energy prices and select the best deal.”
The removal of this final consumer protection price cap and its replacement with a price monitoring system means an uncertain market. The Government is hoping the changes will lead to an increase competition, meaning lower gas and electricity prices for consumers. Some consumer groups are concerned it could decrease competition allowing big retailers to increase their prices.
The question is whether deregulation of market price restrictions will enable large companies to establish an oligopoly on the market.
The legislative change is a result of a Australian Energy Market Commission (AEMC) review which found that Victorian households and businesses would benefit from increased competition in the market where the gas and electricity suppliers competed to provide the cheapest prices.
Victoria has one of the highest switching rates in the world, with 60% of small customers already taking advantage of competition to switch electricity suppliers. During the last financial year 20% of consumers switched electricity or gas suppliers and the health of the market is continuing into 2009.
The deregulation means that consumers can be choosy about their electricity and gas providers. With gas and electricity prices already set to rise by 15-25% over the next 3-5 years fluctuating conditions such as drought and other weather extremeswill mean more consumers may take the opportunity to shop around and switch electricity suppliers.
With this uncertainty in the market, there are steps consumers can take to protect themselves. These include options such as locking in their energy contract rates at the 2008 price for the next two years avoiding any price increases until 2010.
ShopAround.com.au can help consumers take advantage of deals such as these, by comparing gas and electricity prices. Consumers really do need to rethink their gas and electricity providers now rather then later, and by comparing their rates with ShopAround.com.au and then making the switch to a new electricity company or gas supplier online, they can save hundreds.
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