Published: September 15, 2008 - 08:34 PM
By Lesley Coombes
The Australian Financial Review reported Thursday that the Victorian government has legislated to remove all price caps on retail electricity prices and gas rates from 1 January 2009.
Previously the Victorian government was responsible for setting the maximum that Victorian electricity companies and Victorian gas suppliers were able to charge to consumers. From 2009, these Victorian energy companies will now be unconstrained in what they are able to charge Victorian households and small businesses for their electricity and gas usage.
The Victorian government has always kept a tight rein on gas rates and electricity prices charged to consumers by Victorian energy suppliers. This new legislation has come about after a review by the Australian Energy Market Commission (AEMC) found that Victorians benefit from increased market competition where Victorian gas and electricity suppliers strive to offer the cheapest electricity and gas prices and give the best customer service.
The review states that “Removal of retail price regulation in Victoria can further extend the benefits of competition to consumers by enabling them to choose from a wider range of energy products and options (including tariff innovation) than is currently the case. Where competition is facilitating the delivery of efficient outcomes there is no need for retail price regulation.”
Cameron O’Reilly, executive director of Energy Retailers Association of Australia said “Over the past 15 years, Victoria has developed a retail and generation market that is competitive and drives prices to the lowest and most efficient level.” This will create a truly competitive market enabling Victorians to openly compare gas companies and Victorian electricity suppliers for cheap electricity and cheap gas.
The Australian Financial Review reports that this new legislation will enable small consumers and businesses to “shop around among more than 10 retailers for the most competitive prices.”
Removal of these price caps may open up the market, making it more competitive for Victorian gas companies and Victorian electricity providers. Alternatively, however, the cost of electricity and cost of gas to Victorians may increase, as the removal of the energy price capping system removes any protection energy consumers had against the vagaries of the Australian wholesale energy market often brought on by drought and intense weather systems.
Up until now, gas suppliers and electricity providers have been bearing the brunt of the increasing costs that comes with clean energy. Without the security of price caps, these crippling costs may be felt more directly by the consumer.
Once carbon trading is established, the cost of ‘black’ power will increase, forcing gas and electricity suppliers to pass this rising cost onto consumers. As this happens, consumers could be pressured to rethink their energy consumption, motivating them to consider alternative green energy.
David Power of Shoparound.com.au is inviting Victorians to “check out the gas and electricity comparison service offered by shoparound.com.au. In light of the recent price cap removal and the rising costs of Victoria electricity and gas, it will become imperative for Victorians to take a more proactive role in choosing the right gas and electricity supplier for their household and finding the cheapest electricity and cheapest gas prices available.”
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