Generic high tension power cables and tower.   Photo: Chris Ison / The Morning Bulletin
Generic high tension power cables and tower. Photo: Chris Ison / The Morning Bulletin Chris Ison ROK211015celectricity

Electricity firms 'creaming' profits from the vulnerable

IF you ever had the suspicion your electricity retailer was taking a bit too much cream off the top of your bill, well your instincts were spot on.

Despite soaring power prices in NSW being blamed on the so-called "gold plating" of the electricity infrastructure, a new report has found that retailers are partly to blame.

The Grattan Institute's latest report, Price shock: Is the retail market failing consumers, has delivered scathing critique of the impact of deregulation on household electricity prices.

We are now paying double for our electricity since the market was deregulated a decade or so ago, according to the report's author Tony Wood.

And this is the opposite of what was expected.

In theory, more competition leads to lower prices. But it turns out people don't treat electricity like other retail goods: it's a commodity which 99% of us have to buy one way or the other.

Instead of lowering prices, the report found that the proportion of a typical bill derived from retail costs (not network costs) had been amplified in the last decade.

One explanation for this is that retailers like AGL, Origin, and Energy Australia have "super charged" their marketing efforts and passed the cost on to us.

The Grattan report found that electricity retailers' profit margins were also double that of other retail sectors.

It was worst in Victoria, where deregulation has been going the longest.

One of the disturbing trends identified by the report was that often the most vulnerable households were on the baseline deals.

"In 2015, researchers at AGL found that 26,000 vulnerable households were on the company's standing offer," the report said.

Many consumers had simply "given up" and were paying more than necessary.

The Grattan report recommended a possible ACCC review into the retail market especially reviewing marketing costs and profit margins.

It also called for the creation of a single comparison rate, or tariff, so consumers can easily compare rates.

And it recommended that concession card holders should automatically qualify for the best market offer.

Steve Harris, the CEO of local retailer Enova Energy, agreed with the report's findings.

"It's not surprising retailers are making a killing," he said.

Mr Harris said the standard practice of energy retailers was to hand out introductory discounts, but then automatically reverting customers to the standard rate after 12 months unless they actively pursued another discount.

"They rely on people's apathy to not renew contracts," he said.

"I know from experience that people just don't bother to do it."

Mr Harris added that the headline discount numbers were often very misleading because each retailer had a different price to the next - just like petrol.

"Retailers jack up their price, and then appear to give it all back again," he said.

He suggested people go to energy made easy website, at, to find out the best retailer for them.

Enova offers a moderate discount, and at the end of the period of the contract customers will automatically roll over to the next best contract.

"We will continue to give you what we believe is the best offer in your interest," Mr Harris said.

"Over time most customers will be better off with us because you will continue to get a better deal. If you sign up today with us, you'll get a 13% discount."

For solar panel owners, Enova is also paying a 12c feed-in tariff - double most other retailers.

Fresh plan to create ‘Hollywood of the South Pacific’

Premium Content Fresh plan to create ‘Hollywood of the South Pacific’

International-quality sound stage is expected to cost more than $20m

Alleged cop biter to be extradited from Queensland for trial

Premium Content Alleged cop biter to be extradited from Queensland for trial

**WARNING GRAPHIC CONTENT** A South Lismore man is accused of...

Temperatures set to drop below average in parts of region

Premium Content Temperatures set to drop below average in parts of region

Brrr – there’s going to be some cold mornings this week.