The government has recently implemented the Competition and Consumer (Industry Code – Electricity Retail) Regulations 2019 (the Code) to bring down electricity prices.
From 1 July 2019, the Code sets a price cap on standing offer prices in electricity distribution regions where prices are not already subject to price regulation, and requires retailers to use a common reference point to allow for easier comparison of electricity offers.
This follows the announcement by the government on 20 August 2018, that it would implement a Default Market Offer (DMO) for retail electricity standing offers as recommended by the Australian Competition and Consumer Commission (ACCC) in its Retail Electricity Pricing Inquiry final report. The government also announced it would adopt the ACCC’s recommendation to use the new default rate as a reference point in advertising.
These reforms are needed to improve, among other things, competition and transparency in the retail sector to deliver better price outcomes for consumers and address barriers to effective consumer engagement.
- Sets a price cap on some standing offer prices in electricity distribution regions where prices are not already subject to price regulation. This will reduce exorbitant costs for standing offer customers.
- Requires most retail electricity offers to be compared to the price cap - a reference price - to ensure consumers are able to easily determine the relative value and cost of electricity plans
- Confers new functions on the Australian Energy Regulator to determine the price cap and representative usage in each price-deregulated distribution region.
The Code will be introduced by a regulation change under the Competition and Consumer Act 2010.
The Australian Government consulted on the Code from 23 February 2019 to 12 March 2019.
More information on the consultation process is available at the Department of the Environment and Energy website.
Price safety net resources key messages, a glossary to explain the introduction of the reference price and cap on standing offers, case studies and frequently asked questions
Victorian Default Offer (VDO) Victoria State Government
Delivering Affordable and Reliable Power Prime Minister media release 26 March 2019