New rules guard against gas and electricity ‘rip-offs’

New research shows that one third of Australians – or more than two million households – have been left shocked by a hefty electricity bill in the past 18 months. 

But in one state at least, there are moves to minimise bill shock by making energy contracts clearer, fairer and simpler.

The Essential Services Commission (ESC) has moved to tackle bad retail practices in Victoria by:

  • providing pricing certainty for most contracts, by ensuring retailers cannot change energy prices unless the Victorian Default Offer is adjusted (which usually only happens once a year
  • banning contracts where discounts or other financial benefits expire before the contracts end
  • capping the extra amounts that people pay when they are late. This will be capped at a reasonable cost that is independently determined by the ESC
  • making sure that people default to the best offer available for gas or to the Victorian Default Offer for electricity, when their contract expires.

The Consumer Action Law Centre (CALC) National Debt Helpline has welcomed the move.

It says people struggling to pay their electricity and gas bills are regular callers.

Debts are made worse by contracts that allow price jumps, unfair default rates and confusing ‘discounts’ that are really just excessive penalties in disguise, it says.

CALC chief executive Gerard Brody says: “These changes will deliver significant protections against rip-offs for Victorians.

“Energy retailers should not be making excessive profits from people who only pay a day late. Our centre has seen atrocious cases. In one instance, we heard from a person who was already struggling to make ends meet yet was charged over $500 extra for their winter bill.”

The ESC’s recent Victorian Energy Market Report revealed that more than 60 per cent of Victorian households are currently on contracts with pay-on-time discounts.

Mr Brody says the ESC should ensure the draft rules don’t just apply to new energy contracts. “The new rules should protect all households whether they sign up to an energy offer in two years’ time or if they signed up three years ago.”

He is also urging the Victorian government to give the ESC the tools to deliver better outcomes for people using gas as recommended by the Thwaites review.

“Since the Victorian Default Offer was introduced in July 2019, well over 100,000 households have been protected from paying more than $200 extra a year on average for electricity and it is time to introduce the same protections for gas,” he says.

“Gas rates are more complex and prices have been on the rise. The Government has the power to implement a regulated price protection for gas and should do so to stop us from being ripped off.”

The cost of keeping an average home powered in 2017-2018 was $1384, or $27 a week,  according to the Australian Energy Market Commission.

Are you clear on the terms and conditions of your energy contracts? Have you shopped around recently?

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Written by Janelle Ward

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