Australian households pay more than actual electricity consumption

The latest energy report published by the St Vincent de Paul Society shows how the removal of price controls in energy markets have pushed customers to pay an extra AU$600 for their electricity bills.

The St Vincent de Paul Society, along with Alviss Consulting, keeps records of residential energy tariffs and reports how they affect households. Initially only covering Victoria, it extended its service to New South Wales, Queensland, South Australia, Tasmania and the Australian Capital Territory.

Through this report, the society sought to keep a check on the retail component of bills to ensure that households don’t pay more than necessary for their generation (also in case of wholesale services), especially in Victoria, NSW and South Australia where retail prices are deregulated.

The research revealed how retail competition margins have increased largely per customer in these areas. It also showed the differences in electricity billing from 2009 to 2015 across different regions. For instance, while South Australia has had the highest price report in July 2009 and July 2015, ACT has had the lowest. As a result, the differences in consumption levels in both regions, which was only AU$350 in 2009, increased to AU$1000 in 2015. This turns customers' attention to the stark reality of an increasingly alarming energy margin.

According to the Vincent society’s estimate, about 36 percent to 45 percent of electricity bills paid by Victorian households goes to the retailer, indicating that homeowners pay more for their electricity than what they actually used. The same large retail proportion of bills held true in NSW, where households paid 30 percent or more than the actual electricity used.

As a result, these households often pay more than 50 percent extra for their electricity. "There will always be customers who will not or cannot participate in the market, and allowing retailers to charge them a significant premium, just because they can, is not an acceptable outcome," Gavin Dufty, policy and research manager with the St Vincent de Paul Society, said in an interview with The Age.

"With the outrageous retail premiums that customers are currently being charged, we need the market model fixed rather than just blaming consumers for failing to shop around."

The government has been asked by the society to look into the national energy market and the extent to which gas and electricity retailers are increasing their retail margins.

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