It’s no secret that many consumers are unhappy with Australia’s high power prices, and rightly so. In fact, the energy regulator recently reported record low levels of trust in the energy industry in 2018. One of the ideas tossed around by State and Federal Governments to address the electricity price issue is something called a ‘reference bill’.
While there is limited public information on the reference bill at the moment, we’re going to walk you through what we know about it, and how it could change how you compare electricity providers.
What is the reference bill?
The reference bill is intended to serve as a form of reference point for energy retailers to market their prices and discounts to consumers. By providing this point of comparison it’s hoped it will be easier for customers to genuinely compare offers.
Traditionally, energy companies market headline discounts, prices and savings with little context of the assumptions and comparisons the claim is making. This in turn makes it difficult for a customer to know at face value whether or not a product is good value.
The reference bill is intended to ‘even the playing field’ and make it easier for consumers to tell apart good deals. Whenever a retailer advertises a discount or saving, it must be based on the new reference bill. This overcomes issues of potentially misleading savings claims by retailers.
The reference bill will vary across different electricity networks. It is intended to be representative of a standard household, however it is unclear what assumptions it will be based on.
Why is the reference bill being introduced?
In July 2018, the competition watchdog, the Australian Competition and Consumer Commission (ACCC), released its final report on the Retail Electricity Pricing Inquiry (REPI). One of the central conclusions of the report was that the electricity market is confusing and difficult for consumers to navigate. Certain marketing techniques – such as offering large conditional discounts that hide increased electricity rates – also make it difficult for customers to tell whether or not they are getting a good deal.
The REPI report recommended addressing this issue by introducing a reference bill, as well as a default market offer. This is effectively a regulated price to replace existing standing offers. The idea being that the new default price will be lower than standard offer prices, reducing costs for customers that do not engage in the energy market and find a better deal.
The default market offer prices will also serve as a basis for calculating the reference bill for residential customers and small businesses.
.@AngusTaylorMP: It’s a step in the right direction and I commend AGL for this move. These standing offers are the prices you get if you don’t negotiate. Those prices have been too high and AGL have announced a 10 per cent cut.
— Sky News Australia (@SkyNewsAust) November 16, 2018
Am I affected by the reference bill?
The reference bill only affects residential and small business customers in South-East Queensland, New South Wales, South Australia and the ACT. Victoria is also introducing similar regulations, however the Victorian Government is going it alone and devising its own default market offer and reference bill.
WA, NT, Tasmania and the rest of Queensland are state-regulated markets and therefore won’t receive the default market offer or reference bill.
When does the reference bill come into effect?
The Australian Energy Regulator (AER) has been given the task of finalising the reference bill by 30 April 2019, which will then be brought into effect on 1 July 2019. The reference bill will be updated on 1 July of each year afterwards.
How else can I save on power?
The default market offer should make electricity cheaper for some Australians, while the reference bill will hopefully make it easier to shop around for a better deal. If you’re already quite energy savvy and frequently compare electricity deals, then chances are the reference bill won’t affect you that much. If you haven’t compared electricity providers in some time however, then check out Canstar Blue’s price comparison tables and customer satisfaction star ratings via the link below.