Has deregulation led to higher electricity prices in SA, QLD, NSW and VIC?
The answer is yes if a recent report by energy economist Bruce Mountain is anything to go by. The study prepared for the GetUp! Group, which campaigns on issues that affect everyday Australians, looked at how much energy retailers are charging households for their services and whether deregulated retail markets are actually working in the interest of consumers.
One of the key findings from the report was charges for retailing electricity to households in deregulated markets have shot up significantly, compared to the cost of generating the power these households consume.
If we take South Australia as an example, retail charges add up to around twice the amount households are paying for the production of electricity they use.
"Once deregulation occurs, prices rise substantially," Mountain told SMH, adding NSW prices from the big retailers had jumped 10-15 per cent since caps were lifted in July 2015.
The report also revealed that the Big Three energy retailers are charging two to three times more to retail electricity in NSW, VIC, SA and QLD as compared to what’s being charged in the ACT, which is still a regulated market.
According to the study, households typically pay an annual retail charge of around $444 in NSW, $485 in Victoria and $650 in South Australia. Whereas, ACT households are charged around $225.
Considering the three major power providers supply electricity to around 95% of households in Queensland, 90% in New South Wales, 80% in South Australia and 70% in Victoria, a large number of Australians are likely affected by rising energy retail costs.
However, while deregulated markets have been found to lead to higher electricity prices, the important thing for users to remember is that more competition in the energy sector leads to more choice.