The retail charges component of Victorian household electricity bills have risen more than 200% in the past six years says the Brotherhood of St Laurence.
The organisation says an urgent review of the Victorian retail electricity market is required after a study it commissioned determined retailer charges in electricity bills rose by an average 212% over six years; from a range of $86 to $183 in 2008 to a range of $371 to $471 in 2014.
John Thwaites, Chairperson of the Brotherhood’s Energy, Equity and Climate Change program says Victorians are now paying more for retailer charges than the cost of generating electricity.
“In Victoria, fixed charges are 30% to 40% of the average annual bill of $1400 – and most of that is from the retailers. This is the highest proportion in Australia and higher than for household bills in other developed countries,” he said.
The report states there is little evidence of product and service innovation in Victoria, and while retailers have sprung up and gained market share, they have typically been acquired by one of the major retailers once they have gained a sufficient number of customers.
“The characterisation of the retail market, by the Chief Executive of a retailer that was acquired by one of the major incumbent generators, as an oligopoly selling a commodity product seems to be a reasonable characterisation of the current state of a market that has been open to competition for 13 years,” says the report.
“If this characterisation is correct, then households seem to be paying retailers a lot but only getting a little in return. If there is indeed fierce competition, consumers don’t seem to be the beneficiaries of it.”
The Brotherhood said the situation is seriously impacting low income households, which spend a bigger proportion of their weekly income on energy but use less electricity compared to higher income households. Perhaps a sign of the increased financial stress is electricity disconnections have more than quintupled in Victoria the past six years.
The Brotherhood has called for an urgent review of the Victorian retail electricity market by the Victorian Government and the state’s Essential Services Commission.
“The review should consider limits on the fixed charges that a retailer can impose,” said Mr. Thwaites.
A Critique Of The Victorian Retail Electricity Market, prepared by economics consultancy CME and based on analysis of Australian Bureau of Statistics data can be viewed in full here (PDF).
