Attempt to stop utilities changing prices mid-contract rejected by AEMC

The rejection of a proposal that would have prohibited Australian energy retailers from increasing a customer’s electricity tariff mid contract is another blow to households already suffering from rising power prices and hefty bills, consumer advocates say.

The Australian Energy Market Commission (AEMC) rejected the rule change, proposed by the  Consumer Action Law Centre and Consumer Utilities Advocacy Centre (CUAC), paving the way for retailers to continue increasing prices at their leisure.

‘Australians think a contract actually stands for something—that the price you sign up for is the price you should pay. But energy companies think it’s ok to change the terms of the contract as they wish, and it seems the national rule maker agrees with them,’ said Gerard Brody of Consumer Action Law Centre.

The two groups say they pushed for the rule change to give households certainty around energy prices, and make it easier to compare energy deals and to ensure choices are fair.

But the AEMC ruled that energy retailers would have to disclose the possibility of price changes to a customer as they entered a contract, requirements that previously existed in Victoria without effect – a result the costumer advocates say is “manifestly inadequate”.

“Consumers are urged to shop around for the best deal. But what’s the point of shopping around when the retailer can increase the price after they’ve signed you up to a long-term contract?” a release from the two groups says.

Brody said advocates of a competitive market would also lament the decision which means comparing energy plans will continue to be an unmanageable task.

“A competitive energy market has the potential to save Australians money and help them manage their bills, but only if shopping around is easy and choices are fair. Currently there is no standardisation between contracts, and fixed-term contract prices are variable, so finding the right plan is almost impossible.

“In Victoria, even if you use the Government’s online comparison service to find the right deal, you’ll have around 120 offers to choose from. That’s unmanageable. And the price can rise as soon as you sign the contract, so households are just tuning out.”

Brody said the best and easier way to remedy the current situation was to fix energy prices for the length of a contract.

“The proposal had widespread community support but, sadly, it seems the views of everyday consumers don’t hold much sway with the rule makers,” he said.