The Australian Energy Market Commission is preparing to put electricity retailers on the hook for making sure customers are on the best plan, a shift that could change how offers are built, sold and updated. It also wants market signals to be simpler and easier to follow, a move aimed at cutting through the complexity that leaves many households paying more than they should.
The push lands as people search for Australia July 1 financial changes and for good reason: electricity bills are one of the places where a slow-moving customer can still be penalized most. Gerard Brody said customers who stay on the same plan for two years or more are being charged $410 more a year on average, while those left for a decade can pay as much as $950 extra a year. He said the loyalty tax is simply the higher tariff people pay for not checking their retailer’s homework every year.
Last year, an analysis by the Victorian Essential Services Commission backed up that concern, showing the gap between staying put and switching can be large enough to matter to families under pressure. From October, Victoria will go further and require retailers to move any customer who has been on a contract for four years to a cheaper offer, a rule that underlines how far regulators are prepared to go when they decide competition is not working as advertised.
Sally McMahon said retailers often accuse the regulator of over-regulating the sector and adding costs that consumers end up paying, but she said companies usually wait for an intervention before changing their behavior. Speaking at the Australian Energy Week conference, she said regulators do not want to impose more rules if they can avoid it, but they do want to see retailers act proactively, manage complexity and bring better offers to consumers before more protection becomes necessary.
That is where the friction lies. Brody said he has not seen a retailer step forward and say it will put all customers on its best offer, and he said that kind of move would build trust. He also said the industry should compete on offering the best deal to all customers, not on making people sort through a maze of products and risk getting it wrong. Brody said more choice and more disclosure are not necessarily better if the options are not safe or effective.
The AEMC has already been consulting on six draft recommendations, but the final rule changes and the timetable for them are still unclear. What is clear is that regulators now expect retailers to carry more of the burden, and Victoria’s tighter approach shows the direction of travel if the industry does not move first.
