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.

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 energy 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 and gas 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.

Are NSW gas prices regulated?

On 1 July 2017, the Government removed price regulation from the retail gas market. Removing price regulation will promote greater competition in the gas market and encourage more retailers to operate in NSW and offer better energy deals.

The existing Independent Pricing and Regulatory Tribunal (IPART) monitoring role has been extended to gas and IPART will monitor and report annually on competition the NSW gas market.

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 and market 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.

You can find out more information on the removal of retail gas price regulation here.

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 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.

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. The NSW Government offers rebates and financial assistance for eligible customers, and there are other measures in place to help with energy bills. You can find out more here.

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

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 and from the gas retail market from 1 July 2017, 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.

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.