Consumers left exposed to fake ‘discounts’ from energy retailers
A new report from The Australia Institute Climate & Energy Program shows that a Federal Government policy to prevent energy consumers being tricked onto expensive ‘discount’ contracts is unlikely to work.
In his budget speech last week, Treasurer Scott Morrison said, ‘We will keep the pressure on the big energy companies to give you a better deal.’
Energy Minister Josh Frydenberg proposed a rule change to the Australian Energy Market Commission, which released a draft rule in response. The final rule is due out on Tuesday 15 May.
Report author Dan Cass said, ‘Energy Minister Josh Frydenberg’s clear and well-intentioned rule change aims to end the practice of misleading “discounts” that actually result in higher bills.’
‘Deceptive “discount” energy offers are a big problem. Some Victorian consumers are paying up to $2393 more than the cheapest offer in the market, for what is the same electricity.
‘Minister Frydenberg is aiming to protect the millions of energy consumers who are paying more than they should’, said Mr Cass.
The AEMC concedes that its draft is weaker than the Minister’s and would penalise just 17 electricity contract offers. The AEMC estimates there are 1600 offers in the market currently and independent research indicates there may be as many as 2730 offers.
The draft rule has a number of loopholes. For example, movie tickets could be included as part of a “discount” to trick households into paying more for their electricity than they should.
Mr Cass said, ‘If retailers exploit the loopholes in the new rule, there could well be no benefit to consumers at all and no end to the widespread practice of false “discount” contracts.’
‘Clearly more action from government is needed. There should be genuine pricing transparency regulation, as proposed by the Thwaites Review in Victoria. At the very least the AEMC should support a rule at least as strong as the Minister’s and conduct an effective review of the failures in the retail market,’ said Mr Cass.