NSW customers can save by switching energy plans
Since June 2020, retail electricity prices have fallen by around 5%. The growth in household solar systems has driven down wholesale prices in the middle of the day, leading to lower average wholesale and retail prices over the past two years.
In combination with falling wholesale costs, the introduction of the ‘default market offer’ (‘DMO’) in 2019-20 has also reduced prices. This is a cap set by the AER on ‘standing offers’ - which are the offers for customers if they have not actively shopped around.
While standing offer prices have reduced significantly since 2019-20, customers can still save around 20% off these prices by shopping around for a ‘market offer’.
Retailers are increasingly competing for customers
There are now 40 retailers competing in the NSW electricity market, with 16 new retailers entering the market in the past 2 years alone. The smaller retailers now supply around 20% of the market.
The reduction in the costs of solar systems has in part driven the recent influx of retailers, with some of these retailers tailoring their products to solar customers. For example, some are offering solar systems with no upfront costs, and instead incorporating the system costs into retail charges. Others are trialing new technologies such virtual power plants that automatically feed electricity in and out of home batteries depending on the wholesale price at the time.
Gas prices offered to most small customers have decreased
Most small customers in NSW (about 95%) are located in Jemena’s network and the median market price offered in this region decreased by 6% over 2020-21.
Overall, we observed a general trend of competition improving in the retail gas market. The market share of smaller retailers has generally increased, more customers are now on market offers and are satisfied with their gas service.
COVID-19 has generally been managed well by retailers and regulators
While prices are down, customers may be paying more for their energy overall due to higher consumption as a result of COVID-19 lockdowns. In addition, the lockdowns have caused a significant number of households to lose income during the pandemic.
Over 2020-21, data reported to the AER shows some increase in levels of residential electricity debt on hardship programs. As a result, retailers have experienced higher levels of bad debt. However, customers have not been disconnected at higher rates, complaints have fallen, and retailers have not left the market. This has been in part due to the AER’s statement of expectations which places a moratorium on disconnections while stay at home orders are in force.