Investors in AGL Energy and Origin Energy are right to be worried about the prospects for their electricity retailing businesses, according to competition tsar Rod Sims, who is leading the regulator’s crackdown on the way the big three players treat their most loyal – and profitable – customers.
“Our recommendations are unashamedly to help consumers get better deals and that will mean lower returns for the major retailers,” Mr Sims said in an interview after announcing another instance of penalties for misleading discounting.
“I have no hesitation in favouring consumers over the shareholders I’m afraid.”
Mr Sims said the Australian Competition and Consumer Commission’s push for a “default” tariff, which will set a base to measure offers of discounts, will, if implemented, address the “ridiculously high” standing offers by the major players. The big three in the sector also include unlisted EnergyAustralia.
Australia’s primary energy market wrecker, the Australian Competition and Constanza Commission, is talking big today:
What drivel. These loyal customers are only sticking to the majors because for one reason or another they don’t look at their bills. The ACCC will trigger a little switching at the margin and that is all.
The ACCC has turned into something of a hollow vessel on energy. The less it does the louder it bellows about it. One is tempted to read this as institutional defensiveness or guilt.
After all, if the ACCC gave two hoots about consumers ahead of shareholders it could immediately crash electricity prices by endorsing domestic gas reservation including, if necessary, fixed price quotas to force the gas cartel to play ball. That would halve the gas price to $5Gj permanently and drop electricity prices by another third overnight. The weak domestic reservation already enacted is the only policy that has done anything to reduce prices so far. Yet it had to be done despite the ACCC, which had its head stuck in some economic test tube when it argued against reservation in favour of higher prices to trigger a supply response that ain’t coming.
Strict reservation would also sheet home the energy crisis to where it belongs – the LNG export cartel that over-invested in capacity, as well to its shareholders – which would wear the cost of their mal-investment instead of EVERYBODY else subsiding loss-making exports.
Of course it was the ACCC which exacerbated the formation of the cartel in the first place when it waved through a series of mergers in 2016 that consolidated reserves.
The ACCC’s failure on east coast energy is so comically Seinfeldian that policy-makers should do the opposite of its suggestions.
