Calls for deregulation of electricity prices

The Energy Retailers Association of Australia (ERAA) has responded to the government's emissions trading scheme proposal with a joint submission with the Energy Supply Association of Australia (ESAA).

Both bodies have expressed shared concern over continued regulation of electricity and gas prices, saying: "The electricity price consequences of a price on carbon must be addressed constructively."

As the act of putting a price on carbon is intended to change the behaviour of the producers of emissions, ERAA argues that "consumers should be exposed to the cost implications of greenhouse gas emissions".

It argues that retail prices need to be set by "open and competitive retail markets" in order to best pass on the energy efficiency lessons also being learned by electricity generators and suppliers.

If prices are not deregulated, retailers will be restricted by financial losses that limit energy capacity.

An increase in risk of supply shortfall and reliable service will create a volatile market, according to ERAA, resulting in a reduction in competition and potentially higher all-round prices.

Currently, Victoria is the only state to have deregulated electricity prices, whereas all but three have adopted such a policy for gas.