Deregulation

Energy deregulation explained

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The Australian energy market can be complicated. Major aspects of the market seem to constantly shift and create confusion for everyday Australians, not the least being deregulation.

In this article, Canstar Blue explores the deregulated energy market in Australia, and why it matters.

What is energy deregulation?

Energy regulation used to be a responsibility of the state government. The government would manage all gas and electricity distributors and suppliers in the state, and have control over setting tariff rates. However, in the last 17 years, state governments across Australia have reduced control of energy markets by reducing and then removing restrictions on energy competition and prices.

This means that in many Australian states (or regions of a state), private companies are now free to enter and compete in the energy market, and are also given the authority to set their own tariff rates and market offers.

In a deregulated electricity market, all energy retailers are required to offer basic/standard plans with pricing that aligns with the Reference Price. For New South Wales, South East Queensland, South Australia and the ACT the reference price is the Default Market Offer (DMO). In Victoria, it’s a similar situation, whereby providers have to offer customers a default plan, known as the Victorian Default Offer (VDO). The DMO and VDO are reference prices that are government-regulated, providing a level of safety, leaving energy retailers to offer plans with better value for money.

As well as electricity deregulation, the Australian Government has put protections in place to stop price gouging and ensure fair trade. These are in the form of government services that monitor providers, including:

  • Australian Energy Market Commission (AEMC)
  • Australian Energy Regulator (AER)
  • Australian Competition and Consumer Commission (ACCC)
  • Essential Services Commission in Victoria (ESC)

Compare energy deals

Here are some sponsored deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid energy network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some sponsored deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some sponsored deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from our referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some sponsored deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from our referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4011kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Which states have a deregulated energy market?

The energy market comes under state jurisdiction, meaning regulations will vary across borders.

In 2002, New South Wales and Victoria became the first states to introduce Full Retail Competition, which allowed private energy retailers to enter the energy market.

In 2009, Victoria became the first state to completely deregulate its electricity market, meaning the retailers were free to set their own prices. Since then, other states have followed suit.

Current regulated and deregulated states and territories:

State Competition deregulation Price deregulation
New South Wales Yes Yes
Victoria Yes Yes
Queensland Yes Yes (SEQ only)
South Australia Yes Yes
Western Australia No* No
Tasmania Yes No
Australian Capital Territory Yes No
Northern Territory Yes No

*If your annual electricity usage is above 50MWh and you are not connected to Western Power’s distribution network, then can you choose your retailer.

State governments in smaller states and territories are more reluctant to give energy retailers the ability to set their own prices. This is because there are fewer retailers and less competition to ensure a deregulated market has its intended benefits.

Advantages of a deregulated energy market

One of the main advantages of a deregulated energy market is that by allowing energy retailers to compete for market share, they are incentivised to offer lower prices and better services.

Whether or not a deregulated energy market actually works is a contentious subject, as energy retailer costs account for a small portion of electricity charges. The bulk of an energy bill is made up from the wholesale rate that energy retailers themselves have to pay for the energy they sell, and is unaffected regardless of retail competition or price deregulation.

Energy retailers in a deregulated energy market will still try to give themselves a competitive edge, through generous discounts, package deals and lower rates.

The most effective way to save on electricity plans is to follow the energy market’s best offers and switch over when possible.

Compare electricity plans

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4011kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Image credits: metamorworks/Shutterstock.com

Katrina Hasdell
Energy Content Producer
Katrina Hasdell is an Energy Content Producer at Canstar Blue, where she covers Australia’s retail energy market. Katrina is dedicated to providing consumers with easy-to-read information on their energy options so they can get better deals on electricity, solar power and more.

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