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Victorian electricity prices to increase on average by 9% on January 1

Switchwise.com.au identifies where the best electricity deals will be made in 2009

Victorian households will start paying an average of 9.3 per cent more for their electricity from Thursday, January 1 - the day electricity pricing deregulation is introduced to the state.

The result will be an annual increase in the average household electricity bill of around $109, according to Mr Shaun Johnson, CEO of the independent energy price comparison service, Switchwise.com.au.

Switchwise.com.au is a free and unbiased online service that provides consumers with an easy way to compare electricity and gas prices and plans offered by a range of energy suppliers.

Mr Johnson says the new year will see the introduction of full pricing deregulation in Victoria, making it the first state in Australia to allow energy retailers to set their own prices.

"While this will likely spur product innovation and greater consumer choice, the Essential Services Commission has warned retailers against excessive price rises and most retailers have responded accordingly," he says.

According to Switchwise:

• Electricity price rises will range from zero to 33 per cent across energy retailers, with the majority keeping increases under 10 per cent.
• Energy Australia is the only retailer to not yet increase its prices from 2008, which might indicate a desire to aggressively acquire new customers.
• Momentum Energy will post the greatest increase (33 per cent) although it has few residential customers, having sold them to Australian Power & Gas in July, 2007.
• Among the major providers, TRUenergy will increase its prices the least (5.3 per cent) while Origin and AGL's price hikes will be 9.2 per cent and 9.8 per cent respectively.

Mr Johnson says that while deregulation will undoubtedly lead to ongoing price increases, ultimately it should benefit consumers in terms of new products and services.

"Australian consumers have benefited from artificially low electricity and gas prices for a long time so to ensure security of supply there is only one direction in which prices are likely to head over the coming years. Now more than ever it is important for consumers to examine their current electricity and gas supply arrangements," Mr Johnson concludes.

Notes to Editors

• The 2009 standing offer pricing data is published by each retailer in the Victorian Government Gazette.
• Price changes are determined based upon an average of the differences between the 2008 regulated retail prices and each energy retailer's published standing offers for 2009 across the five Victorian distribution areas.
• Calculations assume an average Victorian household consuming 6,000 kWh of electricity per year on single-rate tariff GD/GR, which is the most common tariff type in Victoria. Calculations for other tariff types available upon request.
• In 2002, several years after the break-up and privatisation of the State Electricity Commission of Victoria and the Gas & Fuel Corporation of Victoria, the Victorian Government introduced competition into electricity and gas markets at the retail level. This major initiative led to the entry of new energy retailers into the market, resulting in consumers and businesses having a choice of supplier for the first time. Competition has since flourished - there are now 14 retailers selling electricity and eight retailers selling gas in Victoria, each offering a range of discounts, payment options and renewable energy options. However, competition has been somewhat restricted as pricing has continued to be controlled by the Victorian Government through a price oversight mechanism designed to protect consumers.
• In October 2007, the Australian Energy Market Commission, which was established in 2005 by The Council of Australian Governments (COAG) to set rules and policies for the national energy markets, released its review of the effectiveness of competition in Victoria's retail energy market. AEMC's preliminary finding was that competition in both electricity and gas retailing in Victoria was effective.
• As a result of the findings of this report the Victorian Government took the decision to remove retail price controls on energy retailers. From 1 January 2009, energy retailers are able to set their own electricity and gas prices. However, the Essential Services Commission has been tasked with keeping a close watch on pricing behaviour.

Released: 30 December, 2008.