Finance Your Budget Energy companies swindle all of us: report

Energy companies swindle all of us: report

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The eradication of price controls on energy has resulted in sky high retail margins for providers, according to a new report.

The retail competition margin of electricity makes up the largest chunk of energy bills at almost $600 per customer, St Vincent de Paul Society research shows.

It also said that competition in the market is costly and ineffective, which caused the expensive bills, Fairfax Media reported on Monday.

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“The retail component of bills is too high in the deregulated, competitive electricity market,” the report found.

“We have an energy retail market that ensures customers are paying over the odds for an essential service unless they annually dedicate time to compare energy plans and switch retailer.”

The survey found that as much as 45 per cent of an energy bill’s total cost goes to the retailer (retail cost), with only 11 per cent covering the cost of energy used.

In NSW the retail cost sits at 30 per cent.

St Vincent de Paul reported households can not or have not shopped around for a better deal.

These households pay an average of 50 per cent more for energy than those who shop around.

However when households do shop around for a competitive deal, it only lasts 12 months, meaning they must again shop around to stay on a good value contract.

Policy and research manager with the St Vincent de Paul Society, Gavin Duffy told Fairfax Media energy costs were “outrageous” and that the government needed to fix the problem.

“With the outrageous retail premiums that customers are currently being charged, we need the market model fixed rather than just blaming consumers for failing to shop around,” Mr Dufty said.

“In other markets, your contract expires and then the company has to ‘price to entice’ you to continue to use their service. There is no competitive pressure with energy. We need to address that market failure. The retail cost component looks very expensive: the more competition, the bigger the margin.”

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