Consumers across Australia should be looking forward to a happier new year. From 1 January 2011, Australia will introduce a single, national consumer law -the Australian Consumer Law (ACL). The ACL makes a number of significant changes to unify and tighten consumer rights across all States and Territories of Australia. Of particular interest to us are the changes relating to door-to-door sales as this is a practice aggressively pursued by many energy retailers.
Under the new law, a sales person will not be permitted to knock on your door on Sundays or public holidays, before 9am or after 6pm on week days or before 9am or after 5pm on Saturdays. This new law will have the greatest impact in NSW where door knockers are currently able to annoy you (or sell to you) up to 8pm seven days per week. In Victoria, South Australia and ACT door knockers can currently visit up to 8pm on weekdays so from 1 January you should be able to enjoy your dinner in peace. Queensland residents have already been benefiting from the most restrictive door selling times in the nation and the new laws reflect the standards set in Qld.
It will be interesting to monitor whether these new laws actually result in less door knocking activity by energy retailers and others or whether it will result in more concentrated activity over a shorter time period. If you are a person usually at home during the day then you might actually be worse-off. However, those of you working 9 to 5 should enjoy a peaceful existence.
Over the 32 days remaining until the ACL takes effect, we expect to see a burst of door knocking activity as companies scramble to get as many new customers as they can. This will likely be most acute for NSW residents given that the selling hours are to be reduced the most.
Unfortunately, telemarketing hours have not been reduced in line with the new door knocking hours – this can still be done until 8pm on weekdays and until 5pm on Saturdays. As a result we might expect to see more calls being made to consumers to make up for any shortfalls from door knocking. At least you have some control here – simply register on the Do Not Call Register to avoid irritating sales calls.
We take this opportunity to give one simple piece of advice to all of you – never make a decision at your front door or on the phone. Always ask for an offer in writing, which you can review at your leisure, before making any decisions to enter into new contracts with energy companies or anyone else for that matter. And don’t agree to something just to get rid of a pesky sales person – it’s not worth the hassle. If you don’t take our advice at least remember that by law you have a 10 business day cooling-off period to cancel.
If you are interested, you can read more about the new law on the Australian Consumer Law Website.
The NSW Government last week completed its statutory review of the Solar Bonus Scheme, under which customers were paid 60 cents for each kilowatt hour (kWh) of electricity they fed back into the electricity grid from their home installed solar photo-voltaic cells. Customers installing new solar PV systems after 27 October will only be entitled to receive 20 cents per kWh instead of the previous 60 cents – a massive reduction of 67 per cent.
Customers who have already connected PV systems by 27 October will not be affected by the tariff change and will be entitled to keep receiving the higher 60 cents tariff. However, the NSW Government has introduced a cap on the Solar Bonus Scheme – a total capacity of 300 megawatts (MW) – after which new customers installing solar PV systems will no longer be entitled to receive any bonus payments for feeding solar generated power back into the grid.
The Government is putting a positive spin on taking the knife to the Scheme, saying that the change “reflects the substantial fall in PV system purchase costs over the past twelve months and also takes account of the generous support provided through the Commonwealth’s Renewable Energy Target scheme”. However, it appears that the Government was concerned about the costs of operating the Scheme, which ultimately get passed back to all consumers in the form of higher electricity prices.
The NSW Department of Industry and Investment has put together some FAQs on the changes, which you can read here.
The Institute of Public Affairs last week issued some research, based on Australian Bureau of Statistics data, that revealed that retail electricity prices increased by 51 to 61 per cent in the most populous states of Australia between 2005 and 2010. These increases were up to four times the 16 per cent inflation rate over the last five years.
We believe that this trend of spiraling electricity prices will continue over the coming decade, with electricity rates to at least double and perhaps triple over the next 10 years. This would mean the average household can expect to pay an extra $1500 per year for electricity by 2020, equivalent to about an extra $30 per week taken from the household budget.
Such a large increase in retail electricity prices is expected due to the following five factors:
- Australia’s population is forecast to continue to grow, which means more investment is needed in the electricity network (transmission, distribution) to provide power to more people. This has to be paid for by the end user – households and businesses.
- Whilst many electrical appliances are twice as efficient as they were 10 years ago, Australians are using more power at home due to:
- massive growth in purchases of large, power guzzling, flat screen TVs, often with two or three TVs in the same house
- rapid growth in number of people installing air-conditioners and dishwashers in their homes (only about one third of homes currently have these)
- increased multi-tasking especially among younger generation e.g. watching TV and surfing the Internet whilst listening to music
- Australia currently produces the majority of its power from cheap coal but the price of coal is likely to increase as fast growing countries like China and India demand more and more coal to fuel their rapidly growing energy needs. Local power generators are likely to have to pay prices for coal at higher international levels.
- State governments have in the past often kept consumer electricity prices artificially low but this trend has now come to an abrupt end as evidenced by the 15 to 20 per cent price rises in New South Wales and Queensland in July this year.
- The Federal Government’s mandatory renewable energy target dictates that by 2020 Australia must produce 20 per cent of its energy from renewable sources such as wind or solar. This will mean much higher costs to produce and distribute power to households and businesses because:
- renewable energy power plants cost more to build and run as they are relatively new technologies
- the networks that carry electricity from these new power plants to homes will need to be upgraded and extended at significant cost
- wind power can be unreliable and would likely require back up power plants to ensure reliable supply
What can you do to reduce the heat?
There are two ways to keep your power bills under control:
- Reduce what you use at home – we recommend reading our electricity savings tips as well as requesting an energy audit to better understand where you might be wasting power at home.
- Reduce what you have to pay for this usage - regularly compare energy suppliers to ensure you are getting the best possible deal.
