Australia’s consumer watchdog claims households and businesses could save hundreds of dollars in power bills, if a radical overhaul of the electricity market is implemented.
The Australian Competition and Consumer Commission (ACCC) has found in a year-long audit of the system that it was “broken” and needed to be “reset”.
It believed a lack of competition and policy errors had resulted in customers paying more in their power bills.
“It is clear that most households are paying far too much for electricity,” ACCC chairman Rod Sims said.
“Regulation and poorly designed policy have added significant costs to electricity bills.”
Mr Sims said past failures had “resulted in a serious electricity affordability problem”, leading to customers being “ripped off”.
“Wholesale and retail markets are too concentrated,” he said.
“In addition, some of the most vulnerable in our community are forced to struggle through freezing winters and scorching summers with many others also having difficulty paying their bills.”
The ACCC report recommended 56 changes to the way people are charged for power, finding the market was unsustainable and unacceptable.
It urged changes to get greater competition among wholesalers and retailers, while network charges needed to be lowered.
The report claimed the market regulator should be given tougher powers to deal with price gouging and “market manipulation.”
Transferring between providers should be sped up, allowing customers to switch to new offers quickly.
The ACCC also wanted power generators with more than a 20 percent market share to be banned from further mergers or acquisitions.
It had found wholesalers had manipulated prices by charging large premiums to their own retail operators.
Mr Sims believed a standard price should be a new default offer that was consistent across all retailers.
If the measures were implemented, the recommendations could save the average household between $290 and $415 each year.
Meanwhile 2.2 million small to medium businesses could save an average 24 per cent.
The report supported the Federal Government, backing its energy policy, the National Energy Guarantee.
The government has welcomed the review.
However, opposition energy spokesperson Mark Butler said Liberal state government decisions to privatise the market were “disastrous”.
He said the system was no longer delivering for customers but instead “mega profits” to big power companies.
Mr Butler urged Prime Minister Malcolm Turnbull to “stamp his authority” to give households relief.