ACCC report finds Default Market Offer resulted in drop in energy prices

ACCC report finds Default Market Offer resulted in drop in energy prices
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The Australian Competition and Consumer Commission (ACCC) has released a second report into the National Electricity Market which has found that consumer access to affordable energy has improved. 

The Inquiry into the National Electricity Market – August 2019 report welcomed the introduction of the Retail Electricity Code which enabled the Default Market Offer (DMO) to take effect on 1 July 2019.

The ACCC found that since the start of the code there has been a significant fall in standing offer prices. The Federal Government’s price safety net has locked in better deals for up to 794,000 residential and small business customers on standing offers in New South Wales, South Australia and south-east Queensland.

Based on initial analysis, the ACCC estimates households on standing offers could have already saved up to $190.

Energy and Emissions Reduction Minister, Angus Taylor, said that while it is early days, this is welcome news.

“There has been a reduction in sneaky discounting practices, with retailers moving away from the use of conditional discounts based on excessively high standing offers. From 1 July, retailers are now required to advertise their offers against a common benchmark.

“Importantly, competition is alive in the market, with smaller retailers taking on the big three energy companies and increasing their market share by providing cheaper offers.”

The report restated the ACCC’s support for the Government’s continued action on a range of reforms the ACCC recommended in the Retail Electricity Pricing Inquiry last year, including the Underwriting New Generation Investment Program, and the Business Energy Advice Program to help small businesses understand their energy savings opportunities and choose the best energy plan.

The report highlighted the fact that it still pays to shop around for a better deal. As at 12 July 2019, the cheapest market offer is $290-$380 lower than the price safety net in NSW, $260 lower in south-east Queensland and $300 lower in SA.

“However, there is still more to do,” Mr Taylor said. “The Federal Government has long warned that energy companies must put their customers first, and the market practices the ACCC has described as ‘unacceptable and unsustainable’ must stop.

“That is why the Government is committed to passing our ‘Big Stick’ legislation, which compliments the DMO and provides the ACCC with real teeth to hold power companies to account for their actions in the market.

“The Government will bring this legislation back to the Parliament at the earliest opportunity.” 

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