26 September 2023

Competition drops as energy prices soar

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Electricity and gas prices became less competitive during the 2021-22 financial year and prices are not expected to improve, according to a new interim report from the Independent Pricing and Regulatory Tribunal (IPART).

Releasing the draft Monitoring NSW energy retail markets 2021-22 report for public consultation, Tribunal Member, Sandra Gamble said the energy market was undergoing a period of volatility with retail energy prices going higher.

“We found that the average discount off the standing offer for the median market electricity offer has dropped from around 15 per cent in May 2022 to less than two per cent in August 2022,” Ms Gamble said.

“There has also been a decline in the number of electricity retailers – from 35 with active offers at the end of 2021-22 to 27 retailers in August 2022.”

She said the higher prices in Australia were largely the result of changes in the global market, with significant increases in wholesale electricity and gas spot prices driven by higher global coal and gas prices, as well as coal-fired generation outages.

Ms Gamble warned that while the impacts of these changes on retail prices emerged towards the end of the 2021-22 financial year, “more impact is likely to be felt in 2022-23”.

“While the energy market is currently tough for consumers, it’s still important to shop around,” the Tribunal Member said.

“A typical customer could save up to $60 per year by shopping around,” she said.

“Some customers might be able to save a lot more if it has been a long time since they compared what’s on offer.”

Ms Gamble said the higher retail energy prices were driven by unprecedented average wholesale prices.

“We have seen some retailers charging more than the reference price for electricity,” she said.

“It is particularly important for these customers to shop around for a better offer.

“Customers should also investigate using more energy efficient products to save on their bills.”

Ms Gamble said IPART was inviting submissions on the Draft Report until 31 October.

IPART’s 110-page Draft Report can be accessed at this PS News link and customers can compare energy retailers’ offers on the Government’s Energy Made Easy website at this link.

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