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Electricity Price Caps to be Removed

A revised deal agreed through Council of Australian Governments (COAG), is due to set an aggressive timetable for the removal of power price controls from the remaining States currently engaging in Full Retail Competition (FRC) in their electricity markets.

The Victorian market has been successfully operating without price controls for a number of years now, with the price increases that customers have seen in recent years really being driven by the need to provide further investment back into the infrastructure and electricity networks.

The proposal would mean that New South Wales (NSW) could see price controls lifted by June 2012, Queensland by June 2013 and Tasmamia by 2014.

Some consumer groups remain concerned that at times increased competition, does not bring all the benefits which are anticipated.

Choice director of campaigns Christopher Zinn commented "But the experience of competition hasn't delivered all consumers the best outcomes, and that's because it's hard for people to compare what's cheapest - they can be switched by door-knockers, the churn may not always be in their interest."

Tim Wolfenden, Director of MakeItCheaper.com.au says: "We welcome anything that will increase competition and reduce the price that customers pay for electricity and gas.

The government and regulator need to recognise that misselling can and will occur via the door-knocking industry, but that only really means that they need to be better regulated.  Customers themselves need to become better educated when it comes to door-knockers, and be comfortable saying 'No' to them.

At the moment, price controls are really stifling retail competition in New South Wales.  The sell-off of the three incumbent retailers by the government later this year will help immensely, as will the careful removal of the existing price controls."