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Targeting lower power prices: increase competition not regulation
10 May 2019 | Archive
The Coalition’s commitment to reduce power prices through increased supply and competition is a positive response to calls by the Australian Chamber of Commerce and Industry, Australia’s largest business network, to get power prices down.
“The cost of electricity is a major issue for Australian businesses. With retail electricity prices increasing by 60% over the past decade[1], many small businesses have struggled to stay in business. That’s why small business is campaigning for the next federal government to get power prices down and keep them down,” Australian Chamber CEO, James Pearson, said today.
“We have been calling for policies aimed at lowering costs and increasing competition in the wholesale and retail energy markets. The Coalition’s plan to reduce the wholesale spot price to $70/MWh and lower the average retail price to 25c/kWh will increase the focus on price reduction by aiming for a specific target.
“Implementing many of the recommendations of the Australian Competition and Consumer Commission (ACCC) will increase competition in the wholesale electricity market, as will underwriting new power generation.
“Increasing dispatchable generation capacity so electricity is available on demand, making pricing more transparent through a reference price and encouraging new players to join the electricity generation market will make a substantial difference.
“The benefits of a more competitive market should flow through to lower retail electricity prices for Australian businesses.
“This is a better approach to achieve competition in the retail market than implementing a default market offer (DMO) and wielding divestment ‘big stick’ powers. The DMO introduces a price ceiling that is likely to narrow the range of retail electricity products in the market.
“There is a big debate about energy policy, but there is one thing we should all agree on – the cost of electricity is too high and we need to get the price of power down and keep it down. The livelihood of small businesses – who employ five million Australians, a third of young people with a job and who train 40% of apprentices – depends on it.”
The Australian Chamber is Australia’s largest network of employers, speaking for over 300,000 businesses employing millions of Australians in every sector of the economy, in every corner of Australia. Our Small Business is a Big Deal campaign gives voice to what small businesses need from the next federal government, and our Getting on with Business recommends ways to make Australia the best place in the world to do business.
[1] ACCC Retail Electricity Pricing Inquiry Preliminary Report 22 September 2017
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