Deregulation in NSW electricity market July 2014

From the 1st of July 2014 IPART will no longer be determining default electricity tariffs for small businesses and households (a small business is one defined as using <100 MWh pa).

This is good news for small businesses and households in NSW. While many households and small businesses have opted into fixed term electricity contracts and are achieving a discount of 5% to 18% off their electricity usage, many haven’t and are paying significantly more for their electricity.

So what will happen on the 1st of July?… Not a lot.

Households and businesses currently on a default tariff will be moved onto a transitional default tariff, this is estimated to reduce prices by around 1.5% for households and increase prices by 1.5% for businesses. Household will move onto a full deregulated market in July 2015 and business in July 2016.

What isn’t clear is exactly the new deregulated market will work. Currently it is pretty simple to shop around for the best deal. Energy retailers offer a fixed term contract with % discount off the regulated rate. If one retailer offers a 12% discount and the other a 15% discount it is pretty easy to work out which one to sign with. However under a deregulated market there will be no default price. Energy retailers will not be able to offer a simple % discount, but will have to outline all their costs and charges. Electricity charges can be complex and consist of retail usage, network usage, network demand, metering charges, retail service fees, AEMO fees, and environmental charges.

What is clear is that under a deregulated marketplace it will be more important than ever for business to get the right advice about electricity contracts. Consider conducting an energy audit to identify options to manage and reduce energy costs.

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