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Government directs AER to set default energy price

The introduction of a default market offer was recommended by the Australian Competition and Consumer Commission’s (ACCC) Retail Electricity Pricing Inquiry.

The report, released in July, included 56 recommendations to “fix” the National Electricity Market, including encouraging an increased supply of competitively priced gas to moderate electricity prices.

In a letter to AER Chair Paula Conboy, Treasurer Josh Frydenberg and Minister for Energy Angus Taylor asked the organisation to immediately start developing a mechanism for determining the price of the default market offer, consistent with recommendations 30, 49, 32 and 50 of the ACCC report.

“Consistent with the Inquiry recommendations 30 and 49, we consider the AER is the appropriate body for setting a maximum price for the default market offer in each network distribution region that does not have a regulated standing offer price,” the letter stated.

“We ask that the AER also develop a mechanism for determining a reference bill amount for each network distribution region, from which headline discounts can be calculated, in accordance with ACCC Recommendations 32 and 50.”

The government requested a system to determine the default offer be prepared by 30 April 2019, with a maximum price for the default market offer to apply from 1 July 2019 for customers not subject to state-based price regulation.

In the meantime, the government has requested fortnightly updates from the AER on the progress of the work.

Click here to read the letter.

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