Retail electricity prices increase 12 per cent in 2011-12

Retail electricity prices rose on average between 10 and 12 per cent across Victoria in the 2011-12 year, according to a report issued today by the State’s economic regulator.

The report by the Essential Services Commission (ESC) revealed that retail electricity prices for residential consumers on default contracts, or standing offers, increased by an average of 10 per cent, while prices for consumers on market offers increased by an average 12 per cent.

Retail gas prices in 2011-12 increased across Victoria by an average seven per cent for standing offers and by an average six per cent for market offers, the Commission’s report found.

In the past five years, from 2007-08 through 2011-12, residential standing offer prices increased (excluding inflation) on average for electricity by 33 per cent and for gas by 22 per cent.

Standing offer contracts are held by customers who have not taken up competitively-priced market offers. Around one-third of Victorians remain on a standing offer for their retail electricity or gas.

The Energy Retailers Comparative Performance Report – Pricing covers the period from 1 July 2011 to 30 June 2012, and does not include the introduction of carbon pricing.

It revealed that residential and business customers could achieve substantial savings in their energy bills by taking up competitive market offers provided by energy retailers operating in Victoria.

It found that residential electricity customers who shopped for a competitive offer could save an average 12 per cent, or $114, on their electricity bill by switching from a standing offer to a fully discounted market offer for a single rate tariff.

Residential gas customers could save an average nine per cent, or $114, on their annual bill if they switched from a standing offer to a fully discounted market offer.

Businesses could save an average 12 per cent, or $362, on electricity charges and 16 per cent ($1268) on gas charges by switching to a fully discounted market offer.

The report found that average household electricity bills across the five distribution zones, based on market offers, ranged from $883 (including discounts) to $1245 for single-rate tariffs and from $1123 (including discounts) to $1602 for two-rate (peak and off-peak) tariffs.

Average annual residential bills for gas (market offer) across Victoria ranged from $938 to $1542, depending on the gas distribution zone.

Data for the report was derived from retailers’ websites and the Commission’s Your Choice website, www.yourchoice.vic.gov.au, to which retailers are required to provide gas and electricity offers.

Essential Services Commission Chairperson, Dr Ron Ben-David, said the price comparisons alone did not reflect the full diversity of market offers. Many retailers also provided for a range of non-price benefits including loyalty discounts, vouchers and credit options.

“While many people continue to exercise their choice of energy retailer, it is also important to note that people are under no obligation to change their retailer and should not feel pressured to switch,” he said.

“Customers shopping around should always check a retailer’s offer summary and the fine print of energy contracts for special conditions, such as any fees for early termination of market contracts and any potential additional charges.”