Power companies will be forced to tell consumers when they are about to reach the end of a discounted electricity plan in a move that could help save households more than $1000 a year.
The heads of seven major power companies committed to the new rules at a meeting on Wednesday, which Prime Minister Malcolm Turnbull claimed was aimed at ensuring “millions of Australians get a better deal on their electricity price”.
Under the reforms, energy customers will now be told when they have “reached the end of a discounted plan” by their supplier.
The companies – including Energy Australia, AGL and Origin Energy –will also “outline in plain English alternative offers that are available”, Mr Turnbull said.
Power companies will be forced to alert customers when they are about to be moved onto a more expensive “standing offer”.
Millions of Australians who have already been switched over to these plans will also be informed by their supplier.
“We know that millions of Australian families are paying more than they need for their electricity,” Mr Turnbull said.
“They are on plans that have run out, discounted plans that have run out and they are now on a standard offer and paying too much for their electricity. They have got people that are on the wrong plans.”
The move follows a report from the Energy Markets Commission that found consumers were paying higher power bills, in part, because of a lack of information.
Households in Queensland could save up to $900 a year, those in New South Wales could pocket up to $1400, while South Australians could save up to $1500, the commission said, provided they were willing to switch provider or change contracts.
It comes as energy prices shapes up as a key political issue ahead of the next election.
The government is yet to announce its response to Chief Scientist Alan Finkel’s review into Australia’s energy future.
The review recommended the government adopt a Clean Energy Target, a policy supported by Labor but staunchly opposed by some conservatives within the Coalition.
Labor’s energy spokesman Mark Butler said the announcement did not “reduce the urgency of addressing the key driver of increased power prices”, which was “policy paralysis”.
“None of this will amount to a hill of beans if Malcolm Turnbull is not able to deliver on the central Finkel panel recommendation of introducing a Clean Energy Target sooner rather than later,” he said.
The Greens on Wednesday called for the government to re-regulate the electricity market by capping power prices.
Under the plan, the Commonwealth would give the deregulated states – Victoria, New South Wales, South Australia and parts of Queensland – until 2017 to re-regulate the market.
If that did not occur, the Australian Energy Regulator would take control of prices, with state governments also allowed to create public retailers in a bid to put downward pressure on prices.
“If all the government does is fiddle with discount offers and require more information, there’s nothing stopping the big power companies from just offering fewer discounts and pumping up their prices to compensate,” energy spokesman Adam Bandt said.
“Deregulating electricity prices has failed. It is time the government stepped in and capped electricity prices.”