The electricity and gas retail markets in NSW are competitive, so all customers in NSW can choose their retailer and electricity and gas plans. Customers who do not choose a plan are automatically moved onto their retailer’s default standing offer.
Prior to 2014, IPART set a regulated retail price for electricity customers. Retailers could offer different prices to customers, but customers who did not accept a “market offer” were charged the regulated rates set by IPART.
However in 2014, the NSW Government deregulated electricity prices, which means that IPART stopped setting regulated prices. Retailers can now decide the prices that they charge customers. In July 2017, the NSW Government also deregulated gas prices.
Retailers compete with each other to offer customers the lowest possible prices. When competition is working well, if a retailer increases its prices above the costs of supply, then they will be outcompeted and lose customers to other retailers.
This should drive better outcomes than regulated prices, because retailers have better information than a regulator about the costs of supplying electricity to its customers. Retailers will go out of business if the regulator sets prices too low, but customers will pay more than they should if the regulator sets prices too high.
The Australian Energy Regulator (AER) operates a free electricity and gas on-line price comparison service Energy Made Easy, which enables consumers to compare offers from different energy retailers.
We monitor electricity and gas prices
Now that we are relying on competition to keep prices as low as possible for customers, it is important to understand whether competition is effective. Therefore, the NSW Government has tasked IPART with monitoring the performance and competitiveness of the energy retail market for small customers, and reporting annually to the Minister for Energy.
We set the cap on the fees that retailers can charge if customers leave their energy contracts early
The terms and conditions of retail energy contracts, including pricing and other fees, are subject to agreement between customers and retailers. However, to help protect customers, in 2013 the Government asked IPART to set the cap on the fees that retailers can charge customers if they leave their fixed-term contracts early.
We set the cap on exit fees at $130 for the first year of a contract, and $45 for each year of the fixed contract period thereafter.
However, many retailers don’t charge early termination fees. Because competition has been effectively protecting customers, the NSW Government has deferred further reviews of these fees.
We recommend a ‘benchmark range’ for solar-feed in tariffs to help guide retailers and customers
In NSW, you may receive an ongoing payment (feed-in tariff) for the electricity that is generated by your solar panel. Retailers can choose whether or not to offer solar feed-in tariffs to their customers, and decide the level of the solar feed-in tariff that they offer.
However to help guide retailers and customers, each year IPART recommends a ‘fair and reasonable’ benchmark range for solar-feed in tariffs.
Previously, some solar customers were eligible for a subsidised feed-in tariff under the Solar Bonus Scheme. This scheme closed for all participants at the end of 2016.