The ACCC will be enforcing new rules that will benefit most electricity consumers by both limiting standing offer electricity prices and imposing new advertising rules on electricity providers under the new Electricity Retail Code. This code comes into force today in South East Queensland, New South Wales and South Australia.
From today, electricity retailers have various obligations under the code including:
- Capping their standing offers in line with the AER's independently set default price and moving clients on current standing offers onto the lower price
- Advertising the prices and conditions on their market offers by reference to the default price so retail offers can be clearly compared.
From 1 July 2019, prices will decrease for many customers who have been paying excessively high standing offer prices. The Australian Energy Regulator (AER) has set maximum allowable prices for these standing offers and the ACCC will ensure that retailers are not charging more than they are allowed.
These standing offer prices might not be the cheapest offers in the market, but act as a price constraint for customers who are not on a market offer or for customers whose market offers have expired and who have not yet selected a new offer.
"We will ensure that the standing offer prices come down for all customers on those offers, which includes many who cannot access market offers," ACCC Chair Rod Sims said.
"Retailers should not seek to recoup lost profits from the new cap on standing offer prices from other customers currently on cheaper market offers."
From today, energy advertising and offers must also show electricity prices compared to a common reference price and transparently disclose all conditions attached to the offers.
Past industry practices have made it confusing for consumers to shop around, which is why these new rules were put in place.
Customers looking to compare offers or switch are encouraged to visit the AER's independent price comparator website, Energy Made Easy, to help find a better energy deal.
"We know electricity is a big expense for many householders and we encourage all consumers regardless of what offer they are currently on to look around for a better deal, which will now be much easier to do," Mr Sims said.
"When customers see advertisements with percentage discounts now, they will know that these discounts are off the same base. They will also know exactly how the advertised discounts will apply."
The ACCC will be monitoring and enforcing retailers' compliance with these new requirements.
"Retailers are well aware of these new rules, and they should have no doubt that we will enforce the rules and we will seek penalties if they do not comply," Mr Sims said.
"We will also continue to enforce the Australian Consumer Law against any retailer engaging in misleading or deceptive conduct or making false or misleading claims or statements."
As part of the ACCC's electricity market monitoring inquiry, the ACCC will also be reporting on what happens to the prices and availability of cheaper market offers currently on offer, and will publish its next report by September.
"We see no reason for these current cheaper market offers to be affected if there is truly competition in the retail electricity market," Mr Sims said.
Further information for consumers at Electricity Prices.
Background
On 17 June 2019 the ACCC released a guide for energy retailers about the Electricity Retail Code, which is a mandatory industry code under the Competition and Consumer Act (2010). The ACCC has also released an FAQ for electricity retailers.
The code implements two recommendations made in the ACCC's Retail Electricity Pricing Inquiry.
Under the code the AER is responsible for determining the annual reference price.
On 20 August 2018, the then-treasurer, the Hon Scott Morrison MP, directed the ACCC to hold an inquiry into prices, profits and margins in relation to the supply of electricity in the National Electricity Market. The first report set out how the ACCC will monitor retail and wholesale electricity. The next report is due to be published by September.
