Electricity price deregulation in trouble

A plan to deregulate the retail electricity market from next month has stalled after the NSW government failed to gain the support of the Shooters and Fishers Party in the upper house, due to concerns it could lead to higher prices.
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Energy Minister Anthony Roberts now says ”a number of regulatory options” are being considered by the government to ensure the reform begins on July 1.

The government has been sending notices to customers announcing ”price relief for households from July 1, 2014” in the expectation its legislation would pass the Parliament this week.

But on Tuesday it did not proceed with the bill in the Legislative Council.

Labor and the Greens have said they will oppose the measure and it is understood the Shooters and Fishers Party – which shares the balance of power with the Christian Democrats – is concerned that deregulation would see electricity prices increase.

The Parliament rises next week for the winter recess with Thursday reserved for private members’ business, meaning the legislation cannot be passed until August at the very earliest.

About 35 per cent of NSW electricity customers remain on a regulated electricity tariff determined by the Independent Pricing and Regulatory Authority. The remaining 65 per cent have taken up offers from electricity retailers.

The government’s bill removes the regulated price and instead uses IPART as a ”market monitor” to report annually on the performance and competitiveness of the deregulated NSW retail electricity market.

Customers on the regulated price will be automatically switched to a ”transitional tariff”. The government’s notice says for ”the majority of households” the transitional tariff  will be 1.5 per cent lower than the present regulated price for the first year.

The government cites a report by the Australian Energy Market Commission suggesting deregulation could potentially save customers $300 to $400 a year.

But Greens MP John Kaye said it was a ”myth” that deregulation would lead to lower electricity prices.

”The Baird government arrogantly assumed the Upper House would join them in abandoning consumers to electricity retailers who are known for their predatory behaviour,” he said.

”All that is left of the Baird government’s electricity price deregulation is a glossy pamphlet, a divided upper house and thousands of confused households.”

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