How to make the most of electricity deregulation
A few months ago the Queensland Government deregulated the retail electricity market in South-East Queensland in an effort to lower power prices for businesses and households. So what does that even mean and how does it work?
Since 2007, small businesses and residential customers in SEQ have been able to sign up to market contracts with different electricity retailers, such as Origin and AGL. But some customers have stayed on contract deals known as “notified prices” which, until July, were set by a government body called the Queensland Competition Authority (QCA). Because of these notified prices, electricity retailers were restricted in their ability to offer more competitive deals or contracts to consumers.
Theoretically, now that notified prices have been dropped, it should open up the market further and stimulate competition. Retailers should start to compete with each other to attract and retain customers and to provide products and services that best meet their customers’ needs at the most efficient price. Rivalry between retailers should work to protect consumers from the misuse or abuse of market power. As a result, consumers should start to see cheaper prices and better products being offered. This all sounds pretty great in theory, however in reality, there can be many detrimental impacts on consumers.
Unfortunately, deregulation isn’t necessarily enough on its own for customers to benefit from cheaper prices. Customers need to actively participate in the market to enhance competition. That means shopping around for better electricity deals and switching retailers on a regular basis – exactly as you would for a phone or insurance plan. Even just calling your electricity retailer to ask for a better deal can help grease the wheels of the free market.
I know. There’s a million other things you’d rather do than decipher past bills and new plans. Many small businesses in SEQ have told us it’s simply not worth the time investment. (Which is untrue in most cases, by the way. Major savings are often there for the taking.) There are real risks if business customers choose not to look around. Retailers won’t be pressured into offering better deals, and they’ll see no merit in keeping costs low. Competition can’t work if there is no participation.
Retailers must make sure small businesses are able to understand their offers, contracts and the different products available. They also have an obligation to ensure customers are on the best contract for their needs. Likewise, governments need to make customers awareness of that choice now exists in the marketplace and give them the information they need to search and compare for themselves.
Consistent price hikes mean many business owners now believe they have no control over what they pay for power. But the recent round of deregulation has encouraged retailers to be more proactive when it comes to price, product and service. At the end of the day, it’s up to you, the customer, to change the way you think and act as an electricity consumer.
CCIQ is researching the effect of deregulation on business energy costs. You can help by completing this short survey. Click here to start.
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