What we’re after
Current laws allow energy retailers to increase the price they charge you for electricity at any time during a contract. We think that’s unfair. If a customer is signed up for a fixed term contract, the price should remain the same for the full contract term.
For this to happen we need the Australian Energy Market Commission to change the National Energy Retail Law to prevent retailers varying prices whenever they like. So Consumer Action Law Centre and Consumer Utilities Advocacy Centre (CUAC) have formally requested that the Australian Energy Market Commission change the rules to make the energy market fairer for Australian households.
The AEMC’s response
The AEMC has proposed an alternative rule that would require energy retailers to disclose the possibility of price changes to a customer as they enter a contract – arguing that better information can restore fairness to the marketplace.
This fails to understand how we as consumers make decisions. If we shop around for an energy deal and are only informed at the very last minute that prices are not fixed, it’s highly unlikely we will change our mind at this point, regardless of what is disclosed.
The AEMC argues that banning retailers from increasing prices during a fixed term contract would lead to less energy plans in the marketplace. It seems stuck to the idea that the more offers in the market the better it will be for competition. Again, research tells us that’s not true.
Competition does work if consumers are able to easily choose between various options – anyone who has tried to find the best energy deal lately will know it is anything but easy. Consumers need not just many options to choose from, but some level of standardisation so we can easily compare products side by side.
We’ve got until 11 September to make submissions and get more people to sign the petition – can you ask friends and family to join us?
Where we stand
Consumer Action maintains that, unless there is a significant change in the AEMC’s draft determination, this will have been a lost opportunity to make Australia’s energy markets fairer. Under the AEMC’s proposal:
- Shopping around will be futile; in the face of high prices, consumers are urged to shop around for the best deal. But what’s the point of shopping around when the retailer can increase the price after they’ve signed you up to a long term contract?
- Marketing will continue to confuse: the AEMC’s own research finds consumers are confused about the term ‘fixed’—whether it relates to prices or contract periods—and this will not be addressed.
- Consumers will face unfair sales tactics: a retailer can deliberately set prices below market level to attract customers, then increase the price once the contract is signed.
We’ll be working with our colleagues at the Consumer Utilities Advocacy Centre on our submission to the draft determination, and encouraging other consumer advocacy groups to make their submissions.
And you can help!
Please encourage your friends and family to sign the petition – there’s strength in numbers, so let’s send a strong message to the rule maker that fixed should mean fixed. It’s time to Fix It!