| The competition
regulator thinks it's time government leaders consider whether they really
need retail power price caps, saying the national electricity market could
improve if consumers used energy more wisely and had state-of-the-art
electricity meters.
Australian Competition and Consumer Commissioner Ed Willett yesterday
said it was important that consumers be able to react to price signals,
which could prompt them to use cheaper off-peak electricity.
Interval meters, which use sophisticated digital measurement technology
to show variations in the cost of energy at different times of the day,
could encourage innovation, he said.
For the meters to be truly effective, the regulatory regime would need
to allow for consumers to react to price signals.
Under the current system of price regulation, domestic customers who
have not chosen their own supplier enjoy prices that remain capped.
Sometimes, the capped levels are in fact below cost.
"In short, consumers will only be able to contribute if they are
able to receive and act on price signals," Mr Willett told the
Australian Energy and Utility Summit in Sydney.
Mr Willett said the Parer Review had found that time-of-use meters were
generally only used by larger industrial customers while households, which
use about 40 to 50 per cent of the power in the National Electricity
Market, had little access to such products.
Victoria has been moving to roll out the meters.
"Given the significant demand growth and forecast shortages of
supply that have been projected for the NEM over the next decade or so, it
is a good time for governments to assess the need for retail price
caps," the commissioner said.
He added that, in the meantime, aligning price caps with the underlying
costs of providing power would help encourage new investment.
He said he understood that the Ministerial Council on Energy had agreed
to look at a framework for more efficient retail price regulation and
periodically assessing the need for price caps.
Industry yesterday welcomed the call for reform of pricing of power.
"The industry is strongly supportive of the need to remove retail
price controls in electricity and gas," the chief executive officer
of the Energy Supply Association of Australia, Brad Page, said.
"Such an outcome would enable retailers to offer more innovative
products to the market."
Some of Australia's biggest energy companies have demanded scrapping of
the retail price regulation of electricity. They warn that by making it
hard for energy customers to recover their costs, the caps could deter new
investment and even lead to Australia facing California-type power
problems.
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