Electricity Price Deregulation in NSW - Who to Believe?
The state government has introduced a change that will abolish government regulated electricity tariffs in NSW (commencing yesterday, 1st July 2014).
The NSW Greens are crying foul, saying consumers will lose out in the long run (and they are threatening to reverse the change in the NSW parliament). Many others, including the Energy Supply Association of Australia, are saying this is a big win for consumers (link).
The reality is more mundane. Here are some revealing facts on the topic:
Price regulation does not equal lower electricity tariffs
Regulated tariffs do not result in lower prices for consumers in their own right. The evidence for this claim: just look back over the last few years of electricity tariffs in NSW, prices have gone up by about 100% over 5 years. Can full price deregulation be any worse than that!?
Electricity prices will drop by 1.5% this financial year
As part of the price deregulation a deal has been struck so that tariffs will actually drop by 1.5% this financial year. Next financial year (2014-2015) they will be limited to an increase no greater than the consumer price index (CPI). These so-called 'deregulated tariffs' are still regulated for the next two years.
Only 35% of consumers remain on regulated tariffs
Possibly the most important thing to note is that the electricity and gas market in NSW is already deregulated and has been for many years. This is why you are able to change supplier (which you couldn't do in decades past).
The price deregulation we are talking about here will only affect the 35% of consumers who remain on the relatively uncompetitive 'Government Regulated Tariff' (link - PDF).
The future of electricity tariffs
As for the future of electricity tariffs, your guess is as good as mine. I am willing to speculate that they will only get more complex to navigate and the trend in price will be upward over the long term.
The only certain way to beat them is to use less electricity.
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