Cut energy prices or face more regulation, says AEMO boss
The Australian Energy Market Operator chief executive Audrey Zibelman said the federal government would have no choice but to put more regulation on electricity retailers if they could not show how they were going to cut prices, especially on low-income households.
With seven energy retailers summoned to Canberra to meet with Prime Minister Malcolm Turnbull on Wednesday, Ms Zibelman said the companies needed to show they had a specific plan to put downward pressure on prices.
"I would expect, as we saw with the meeting with gas suppliers, a recognition that we need to move forward and the seriousness of the concerns," Ms Zibelman told a Committee for the Economic Development of Australia lunch in Brisbane on Tuesday.
"I would expect out of that to see a plan. I'm going to assume all of these companies are in business to serve customers and to provide an outcome that's good for consumers and recognise they have to step up and make changes or the government has no choice but to step in which is not the outcome that I expect any of them would want to see."
It comes as the chief executives of Snowy Hydro and Momentum Energy have pointed the finger at the big three retailers - AGL Energy, Origin Energy and EnergyAustralia - for many of the issues that have led to the summons to Canberra.
Momentum chief executive Paul Geason called for an end to the discounting war that he said was primarily fuelled by the three majors, saying the problem with customers not switching to a more competitive contract was also an issue for the incumbents.
"The challenge for the big three retailers is that the 50 per cent of consumers that have not switched their energy services in the last five years are most likely with those big three," he said.
"So the question really is, what is going on that is preventing those consumers from making a choice to acquire their energy elsewhere and access cheaper rates?"
Momentum, the retail arm of Hydro Tasmania, is working alongside the Australian Energy Council to try to find common ground ahead of the 9am Wednesday meeting with the Prime Minister and Energy Minister Josh Frydenberg.
Mr Frydenberg on Monday threatened to use more regulation on energy retailers unless they could show how households could get a better deal to provide relief from high electricity prices.
Yet Mr Geason said that was difficult given the different practices of Momentum, which uses its zero-discount offers as a marketing point, to emphasise simplicity for customers.
But Snowy Hydro chief executive Paul Broad - who controls the Red Energy and Lumo retail brands - has taken a different position, saying he had deliberately decided not to work alongside the AEC chief executive Matthew Warren to try to agree a joint approach ahead of the meeting.
"I think that's the wrong way to go," Mr Broad said. "I didn't want to be muzzled by Matthew Warren. We should feel unfettered and give full and frank information to the Prime Minister."
Mr Broad said he believed it was important to retain the differences between the market offers by various retailers to drive effective competition, and signalled that any common approach by retailers to the issues may compromise that.
He said he would be "very disappointed" if governments moved to take control over electricity retail prices, saying he would be urging the government to look more at the wholesale part of the market rather than at retailing and discounting.
Energy Consumers Association chief executive Rosemary Sinclair said the energy retailers could do a range of things to boost competition and give consumers more choice, similar to the shake-up of the telecommunications sector 10 years ago.
Mr Turnbull said power companies had to do better, saying a significant number of customers were on standing offers which put them on the highest tariff after their contract expired. He said the gap between the best and worst offers could be up to $1500 per household.
"Too many families are not on the best power deal they are entitled to," he said. "This situation must be addressed - urgently and directly. We do not want households to pay one cent more than they have to."
It comes as the Council of Australian Governments energy council announced Sydney businesswoman Kerry Schott would chair the new Energy Security Board which will deliver on the recommendations on the Finkel Review into energy security.
Ms Schott, who will stand down from her current role as chair of NSW transmission company Transgrid to take on the position on the Energy Security Board, will be assisted by Business Council of Australia member Clare Savage who will be deputy chair.
The other members of the Energy Security Board will include the heads of AEMO, the Australian Energy Regulator and the Australian Energy Market Commission.
Friday, August 11, 2017
Subscribe to weekly updates
- Emissions Reduction Fund the great survivor of Australia's climate policy
- S&P's sobering warning on energy policy vacuum
- Vintage Energy aims to 'make a difference' in east coast gas supply
- Direct Action back on the agenda-Graham Lloyd
- Origin Energy to cut power bills as it ‘turns the corner’ on prices
- Queensland could be 90% renewable by 2030 – with right policy settings
- Coal shows resilience in global comeback
- How the NSW energy grid almost went dark last week
- Trevor St Baker backs Angus Taylor on renewables
- Wholesale energy prices have spiked as government split over policy