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Is New South Wales on the road to lower electricity prices?

Electricity prices may soon be eased in new south wales 16000646 800504685 0 0 14087041 300

New South Wales may be about to experience a reprieve from high electricity prices as a recommendation moves to reduce bills and reform the energy market.

The Australian Energy Market Commission (AEMC), rule maker and developer for Australian energy markets, explored in a draft report why NSW consumers have been facing high electricity costs.

Reasons the AEMC attributed these high prices to included increases in network costs, the privatisation of government-owned retail businesses and the partial sell-off of generation trading rights.

In light of this, in its report, the AEMC has recommended that NSW removes retail electricity price caps.

According to the Clean Energy Council, this would allow increased retail participation and competition, allowing new entrants into the market and giving consumers more options for clean energy.

The draft report for the Review of Competition in the Retail Electricity and Natural Gas Markets in NSW is looking like the first step towards opening up to full retail competition in the state - which can lead to lower energy costs for consumers.

"Energy prices in Australia are unfortunately likely to continue increasing, with global influences having an impact, as well as the impending domestic gas price hike," said Clean Energy Council chief executive David Green.

"If NSW were to adopt the draft recommendation to remove price caps, this could go a long way towards using the competitive pressure of the market to enable consumers to get a good deal, and also keep the state moving along the road towards a cleaner energy future."

Other states such as Victoria and South Australia have opened up their electricity markets to retail competition, and this has set the stage for a greater variety of companies and products to be available to consumers.

Mr Green also commented that removing retail electricity price caps would encourage companies to innovate and attract customers, leading to better deals for everybody.

However, he also noted that there's still a long road ahead for NSW to achieve price deregulation and real consumer choice.

Despite this, consumer awareness of retail competition is high, with 90 per cent of those surveyed as a part of this draft report saying they are aware they can choose their electricity retailer, with a number of consumers also using an electricity comparison service to switch their energy provider.

Posted by Charlie Moore