What determines electricity prices?

Electricity prices include costs such as:

  • generation costs – the cost of purchasing electricity from generators
  • network costs – the cost of transporting electricity along poles and wires
  • retail costs – the cost of running a retail business. Retailers are the businesses that buy the  electricity from the generators and sell it to households and businesses. Retail costs include billing and marketing.
  • state and federal government green schemes (e.g. schemes designed to reduce greenhouse gas emissions associated with the generation of electricity. These include schemes which promote solar or wind energy).

Are NSW electricity prices regulated?

On 1 July 2014, the Government removed price regulation from the retail electricity market. Removing price regulation will promote greater competition in the electricity market and encourage more retailers to operate in NSW and offer better energy deals.

The Independent Pricing and Regulatory Tribunal (IPART) will continue to play a role monitoring the NSW electricity market and analysing competition indicators, and will report annually to the Government for an initial three years, to 2017.

The network component of the retail price will continue to be regulated. The Australian Energy Regulator (AER) is the national, independent specialist regulatory body for the distribution and transmission (poles and wires) electricity network and most gas pipeline businesses in Australia. The AER reviews the revenue requirements of the network businesses every five years and the network businesses then submit annual pricing proposals which must be consistent with the determination.

What has been the impact of deregulation on electricity prices?

Since 1 July 2014, approximately 438,365 or 40 per cent of customers who were on the transitional tariff have moved to another electricity offer, while around 20 per cent of the state's 3.3 million electricity customers remain on the transitional tariff.

IPART's Final Report: Review of the performance and competitiveness of the retail electricity market in NSW, found that in the first year of electricity price deregulation, the market is working effectively and that

  • households could save up to $389 to $522 by switching to the lowest priced market offer
  • changes in small business standing offers from June 2014 to June 2015 saw retail electricity prices also decline between $125 to $438.

IPART's report also found that the deregulation of retail electricity prices was a major reason for four new retailers entering the NSW market and for small retailers increasing their market share.

Who are small electricity customers?

Small customers use less than 100 megawatt hours (MWh) of electricity per year.

Households and many small businesses are classed as 'small customers' as the average household consumes approximately 6.5 MWh of electricity per year.

What is the difference between a standing offer and a market offer electricity contract?

All retailers offer standing offer contracts.

The terms and conditions of standing offer contracts are regulated by law. This means that retailers cannot change the terms and conditions. The prices under standing offer contracts are set by the retailers themselves and cannot change more frequently than once every six months.

The prices under market offer contracts are set by the retailers. The terms and conditions of these contracts must adhere to minimum requirements governed by law. However, retailers and customers can choose to negotiate all other terms and conditions of the contract.

Most NSW customers are able to choose between being supplied electricity on standard prices or entering into a market contract.

The Australian Energy Regulator (AER) provides a free price comparison website that allows customers to easily compare prices between electricity and gas retailers. More information can be found at Energy Made Easy. A telephone price comparison service is also available by calling 1300 585 165. It is useful to have your bill in front of you when you call.

What are the charges on my gas bill?

The price on your gas bill is made up of the following charges:

  • Wholesale costs – around 25 per cent of the typical gas bill covers the cost of extracting and producing gas.
  • Network costs – make up around 55 per cent of the typical gas bill and covers the cost of transporting gas via transmission and distribution pipelines.
  • Retail costs – around 20 per cent of the typical bill is to cover the costs retailers incur in managing customer accounts, for example, billing and marketing activities.

Who are small gas customers?

NSW small gas customers are generally households and small businesses that use less than 1,000 gigajoules of gas per year. To put this into perspective, typical households in the Sydney metropolitan region use about 23 gigajoules of gas per year. Small customers can choose between three different retail contracts:

  • A regulated offer contract;
  • A standing offer contract; and
  • A market contract.

Who sets NSW gas prices?

Under a regulated offer gas contract, the Independent Pricing and Regulatory Tribunal (IPART) negotiates prices with regulated gas retailers supplying small customers in NSW. IPART's pricing agreements establish the maximum average price that each retailer can charge small customers on regulated contracts in different parts of NSW.

Regulated gas retailers in NSW are:

  • AGL – Greater Sydney region and inland NSW
  • Origin Energy – South Western regions of NSW and NSW/Victorian border
  • ActewAGL – NSW/ACT border and Shoalhaven.

The Australian Energy Regulator (AER) sets most network charges for gas however some network costs are unregulated. In NSW, the majority of gas networks are owned by private companies such as Jemena Pty Ltd. The AER sets the amount most network companies can charge retail gas companies and this cost is included in the price paid by small gas customers.

All retailers offer standing offer contracts.

The prices under standing offer contracts are set by the retailers themselves and cannot change more frequently than once every six months. There are also no exit fees and a customer can change contracts at any time.

Under a market offer contract, the prices are set by the retailers. There may be fixed terms and exit fees associated with these types of contract, although in NSW most retailers set exit fees at zero.

What is a regulated gas price and do I have to pay this?

A regulated gas price is the maximum average price that can be charged to customers on a regulated offer gas contract.  Under a regulated offer gas contract the terms and conditions are governed by law and the prices are regulated by the Independent Pricing and Regulatory Tribunal (IPART).  IPART does not set the actual price paid by individual customers, it sets the average price cap that can be charged across customers on regulated gas contracts.

Prices vary between the regulated gas retailers reflecting the unique characteristics of each network, which include differences in the number and length of pipelines in each network, the terrain and the size of the network area. It is important to note that a regulated gas price may not always be the cheapest price available.

Customers are encouraged to visit the Australian Energy Regulator’s (AER) price comparison website at www.energymadeeasy.gov.au to compare and find the best gas deal to suit their needs.  For customers that may not have access to the internet or require assistance, they may call the Australian Energy Regulator on 1300 585 165.

Why are the price increases different for each gas retailer?

Gas network charges account for about half of a customer's total gas bill. Prices vary between the regulated gas retailers reflecting the unique characteristics of each network, which include differences in the number and length of pipelines in each network, the terrain and the size of the network area.

The Australian Energy Regulator (AER) sets most network charges.

The Independent Pricing and Regulatory Tribunal (IPART's) final report on regulated gas tariffs provides for retailers to pass on to customers any changes in network tariffs.

What are regulated gas prices from 1 July 2016?

In June 2016, the Independent Pricing and Regulatory Tribunal (IPART) released its final report on regulated retail gas prices for NSW.

IPART’s report meant that prices remained steady in 2016/17. On average, regulated retail gas prices increased by 0.3% across NSW in 2016/17. This price change is less than the rate of inflation and equates to a rise of between $2-7 during the next year for the average household, depending on where you live (except for customers in the Queanbeyan and Capital regions who are anticipated to see a slight decrease of $89 and $5 per annum respectively in their annual bills).

An indicative annual household customer bill in 2016/17 will range between $898 and $1,320, depending on where you live.

For typical small business customers, the annual bill changes will range from a reduction of $464 to an increase of $39.

For more information on the price of gas for each regulated gas retailer, visit IPART's website.

What assistance is available for customers?

The NSW Government offers rebates and financial assistance for eligible customers, and there are other measures in place to help with energy bills, including:

Centrepay is also available to prevent large energy bills by making regular instalments.

More information on assistance measures is available from your electricity retailer or by visiting the rebates page.

What else is the Government doing to address energy price rises?

Since 2011, the NSW Government has taken a number of steps to place downward pressure on energy prices and deliver a better outcome for households and small businesses:

  • Deregulation — removing price regulation in the electricity retail market from 1 July 2014 to encourage more competition, consumer choice and better deals
  • Networks — requesting NSW electricity network and transmission companies revise capital expenditure plans in light of decreased demand forecasts
  • Customer assistance —providing more than $250 million for customer assistance through the Low Income Household Rebate, Family Energy Rebate, Life Support Rebate, Medical Energy Rebate and Energy Accounts Payment Assistance (EAPA) scheme and the new NSW Gas Rebate
  • Reducing duplication among federal and state green schemes
  • Solar — closing the unsustainable Solar Bonus Scheme and establishing a fair and reasonable benchmark solar feed-in-tariff.

The NSW Government is also continuing with its reform program of the State-owned network companies including capping rising network prices at, or below, the Consumer Price Index (CPI) from 1 July 2013 over the next six years.

As a result of these reforms, the Government has identified more than $5.4 billion in unnecessary future capital expenditure has been avoided and will no longer need to be passed onto customers.

I run a small business, what assistance is there to help me?

The Office of Environment and Heritage's Energy Saver program provides services to small businesses, as well as medium to large businesses in NSW. Energy Saver is a single point of business support and helps reduce energy consumption and costs. It also provides technical support for energy efficiency projects and energy efficiency resources and training.

Resources include guides on lighting and industrial refrigeration. For further information visit Energy efficiency for your business or contact Energy Saver on 1300 361 967.

In addition, energy retailers offer programs to assist businesses to improve their energy efficiency and reduce their electricity bills.

I have tried to talk to my energy retailer but they won't help, what can I do?

Customers who need assistance with their electricity or gas bills should first contact their retailer. Retailers have an obligation to offer customers having difficulty paying their energy bills a reasonable payment plan or support through their hardship policy.

Customers who are experiencing difficulty dealing with their retailer can contact the Energy and Water Ombudsman NSW (EWON), which is a free, independent service available to help resolve disputes.

EWON has been approved by the Government as an independent way of helping customers resolve disputes with energy providers where internal dispute resolution procedures have failed. For more information you can contact EWON on freecall 1800 246 545 or visit www.ewon.com.au.

You can also contact a community welfare organisation or financial counsellor. Community welfare organisations may be able to help people with immediate difficulty paying energy bills, for instance through the provision of Energy Account Payment Assistance (EAPA) vouchers and other emergency assistance. Financial counsellors can take a more holistic, longer term approach to dealing with the customer's financial difficulties. Financial counsellors work closely with community welfare organisations and can refer clients to other services where appropriate.

Can I shop around and compare energy deals?

Visit the Australian Energy Regulator's price comparison website www.energymadeeasy.gov.au that allows small customers (households and small business) to easily compare electricity and gas deals for free.

For customers that may not have access to the internet or require assistance, they may call the Australian Energy Regulator on 1300 585 165.

What rebates and assistance can I get for my gas bill?

From 1 July 2015, the NSW Government is introducing a new gas rebate to assist eligible households to manage the impact of changes in gas prices. The gas rebate will be worth up to $90 each year and will be available to an estimated 290,000 customers. Customers will need to meet the same eligibility requirements as the Low Income Household Rebate. This means that a customer must hold one of the following concession cards:

  • a Pensioner Concession Card issued by either Department of Human Services (DHS - formerly Centrelink) or the Department of Veterans' Affairs (DVA) or
  • Gold Cards issued by DVA marked with either:
    • War Widow or War Widower Pension; or
    • Totally and Permanently Incapacitated (TPI); or
    • Disability Pension (EDA). or
  • a Health Care Card issued by DHS.

The new gas rebate can be received in addition to any of the other NSW energy rebates.

The Energy Accounts Payment Assistance (EAPA) scheme is different to rebates and EAPA vouchers can be used for both electricity and gas accounts.