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 NSW Government removed price regulation from the retail electricity market. Removing retail price regulation promotes greater competition in the electricity market and encourages more retailers to operate in NSW and offer better energy deals.

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

The network component of the retail price continues 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 can 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 two different retail contracts:

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

Are NSW gas prices regulated?

On 1 July 2017, the NSW Government removed price regulation from the retail gas market. Removing price regulation promotes greater competition in the gas market and encourages 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?

On 3 September 2017, the NSW Government announced the Energy Affordability Package with a range of measures to help customers including rebate changes, changes around payment plans and getting a better deal and new energy efficiency measures to help reduce bills.

The NSW Government offers a number of 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.

If you’re having trouble paying your bill, you can ask your retailer to put you on a payment plan. Payment plans allow customers to pay their bills in more regular, affordable instalments. If you’re not sure what questions to ask or how to start this conversation with your retailer, Energy Consumers Australia’s website “PowerCall” might be able to help. Visit PowerCall at http://energyconsumersaustralia.com.au/powercall/.

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

Through the Office of Environment and Heritage, the NSW Government has also agreed to a number of energy efficiency measures for households and small businesses. This includes energy savings upgrades, financial incentives to support the replacement of inefficient appliances, and training for small businesses to take control of their bills. You can find out more at future.environment.nsw.gov.au/energy-affordability

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

The NSW Government is implementing its Energy Affordability Package. This package sees changes to three key areas of assistance for small customers:

  • Changes to NSW Government rebates;
  • Changes to information provision and customer service; and
  • New energy efficiency measures for households and small businesses.

Energy Rebates

Energy rebates in NSW (and our EAPA voucher scheme) will have new rates of payment for eligible customers. The rates will be roughly 20 per cent higher than the previously approved rates. This will come into effect from 1 July 2017.

Information provision and customer service

The NSW Government has also decided to:

  • require retailers to assist customers who receive an energy rebate and are on a standard contract to find a better deal and move them off the standard contract if that is more beneficial; and
  • stop the charging of early termination fees; fees for customers who choose a paper bill; and fees to customers for paying their bill over the counter at Australia Post.

Implementation of these changes is ongoing. More information will be provided when these new rules take effect.

Energy efficiency measures

Through the Office of Environment and Heritage, the NSW Government has also agreed to a number of energy efficiency measures for households and small businesses. This includes energy savings upgrades, financial incentives to support the replacement of inefficient appliances, and training for small businesses to take control of their bills. You can find out more here:  future.environment.nsw.gov.au/energy-affordability

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

The NSW Government has announced new small business programs starting in early 2018. For more information visit: future.environment.nsw.gov.au/energy-affordability

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.

Small businesses may also be able to take advantage of new energy efficiency actions under the new Energy Affordability Package. For more information visit future.environment.nsw.gov.au/energy-affordability

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.

If you’re not sure what questions to ask or how to start this conversation with your retailer, Energy Consumers Australia’s website PowerCall might be able to help.

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 NSW 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.

You might also want to contact your retailer and ask them if they can offer you a better deal. If you want to know what questions to ask or how to start this conversation with your retailer, Energy Consumers Australia’s website PowerCall might be able to help.