Energy Deregulation Explained

There’s been a lot of discussion about ‘energy deregulation’ over the years. To some people, it might sound like just another political debate that no one really cares much about. However, the effects of deregulation can have a massive impact on you and your bank balance, so it’s important to know what’s going on in your neck of the woods.

What is energy deregulation?

Traditionally, a state government was responsible for its entire energy sector. It would manage all gas and electricity distributors and suppliers, and have control over setting tariff rates. In the last 15 years, however, state governments across Australia have progressively reduced their grip on their energy markets by reducing and then removing restrictions on energy competition and prices.

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

In a deregulated market, all retailers are still required to offer basic plans with pricing that aligns with the Reference Price in New South Wales, south-east Queensland, South Australia and the ACT. In Victoria, it’s a similar situation, whereby providers have to offer customers a default plan, known as the Victorian Default Offer or VDO. These are government-regulated plans and while they are not usually the best value for money, they do provide a level of safety for those less engaged in the market.

Which states are deregulated?

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 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.

Residential electricity deregulation by state and territory:

State Competition deregulation Price deregulation
New South Wales Yes Yes
Victoria Yes Yes
Queensland Yes Yes (south east 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 therefore less competition to ensure a deregulated market has its intended benefits.

Advantages of energy deregulation

Allowing the energy retailers to set their own prices sounds pretty scary at first – what’s to stop them from raising the price as high as they want? The idea behind a deregulated 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 deregulation actually works is a contentious subject, as retailer costs account for a small portion of electricity charges. Rather, the bulk of your energy bill is made up from the wholesale rate that retailers themselves have to pay for the energy they sell you, and is unaffected regardless of retail competition or price deregulation.

With all that said, energy retailers in a deregulated market will still try to give themselves a competitive edge, through generous discounts, package deals and lower rates where possible. The trick is to follow the best offers and switch if you think you could save.

Compare Energy Plans

For those Aussies in areas that allow them to switch plans or providers, then take a look at some of the cheapest deals in market below.

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 3900kWh/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 4600kWh/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 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.

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