Watchdog’s audit reveals electricity price gouging
A RADICAL overhaul of the energy market is under consideration by the Turnbull government with a major investigation by the nation's consumer watchdog finding prices would drop significantly if changes are made.
The Australian Competition and Consumer Commission audit of the energy market, to be released today, has found big power generators like AGL are charging artificially high prices to their retail divisions, which then pass them on to families.
The review, which was commissioned by Treasurer Scott Morrison in March last year, recommends letting the regulator set a benchmark price so discounts set by AGL and similar companies become meaningful.
It has found discounts are often misleading, and special conditions like "pay on time" rewards often operate as harsh late payment penalties in reality.
Major reforms would "bring down prices and restore consumer confidence and Australia's competitive advantage," the report to be unveiled by ACCC chairman Rod Sims will say.
"Significant gains can be made for consumers and businesses" if the reports recommendation's are adopted, it says. It is understood the federal government will not adopt all recommendations, while others will have to be considered by state governments.
The report's release comes amid increasing pressure from Coalition MPs on Prime Minister Malcolm Turnbull, who is scheduled to give a major speech on energy in Brisbane today, to move on power bills.
A draft ACCC report released in September found energy prices faced by families and small businesses had increased by between 80 per cent and 90 per cent in the past decade.
It found low income families were cutting spending on basics including food, education and healthcare just to pay for rapidly increasing electricity and gas bills.
The ACCC investigation is also understood to recommend a restriction on allowing any major energy company to merge or acquire any of its rivals, in practice capping them at a 20 per cent market share. In NSW, the three largest companies - AGL, Origin and Snowy Hydro - own energy generators and retailers. They control 29 per cent, 23 per cent and 19 per cent of the market respectively, the latest figures show.
The report also recommends the Australian Energy Regulator be given the power to target "market manipulation" by these large companies, with unnecessary charges being passed on to consumers costing them hundreds of dollars every year.