"From now on, retailers will need to work harder and offer better deals to win customers": New South Wales opposition leader Barry O'Farrell.
"From now on, retailers will need to work harder and offer better deals to win customers": NSW Premier Barry O'Farrell. Photo: Jon Reid







Household power bills will go ''through the roof" after the
O'Farrell government lifts a cap on electricity prices, the state
opposition has warned.



Labor says the O'Farrell government's announcement on Monday
that the Independent Pricing and Regulatory Tribunal would no longer set
power prices removes a safety net that ensures electricity consumers
get a fair deal.




But the stance is at odds with federal Labor's position in
government, when it said NSW must find the ''political courage'' to
deregulate electricity prices to stop power bills soaring.



Premier Barry O'Farrell said deregulation would increase
competition in the energy market and push down prices for more than 1
million electricity customers.




''From now on, retailers will need to work harder and offer better deals to win customers,'' he said.



The decision affects about 40 per cent of electricity customers - those on standard contracts, where the price is set by IPART.



The remaining customers are on market-based contracts and can shop around for the cheapest deal.



The deregulation process will begin on July 1. The government
says IPART will continue to monitor the electricity market. However, it
would not commit to reintroducing controls if its reform does not lead
to more competition or lower prices for consumers.



Labor leader John Robertson said energy companies could now
charge families ''whatever they want'' and deregulation had failed in
other states.



''South Australia has the highest electricity bills, on average, in the country and prices have risen in Victoria,'' he said.



A spokesman for Energy Minister Anthony Roberts said that
since 2009, the average Victorian competitive market price has increased
less than the NSW regulated price. He said the South Australian market
was only deregulated a year ago and it was too early to measure the
reform's success.



In late 2012, federal Labor's then minister for resources and
energy, Martin Ferguson, said retail price deregulation allowed more
competition and easier switching between electricity retailers. He
called on the states to find the ''political courage'' to deregulate the
market.



Consumer watchdog Choice said the main cost drivers of
electricity bills were infrastructure costs, such as upgrading poles and
wires. Mr O'Farrell has said he does not intend to take a policy to
sell the poles and wires to next year's election.



A Choice survey in 2012 found that a third of consumers who
had joined their retailer in the previous three years had tried to
compare providers but found it too difficult.



Public Interest Advocacy Centre chief executive Edward Santow
said well-implemented deregulation should lead to lower prices. But he
called on the government to review fees charged by retailers and
concessions and rebates for households struggling to pay bills.



The NSW electricity market is dominated by Origin Energy, EnergyAustralia and AGL.



A report by the Australian Energy Market Commission last year
found households could be as much as $400 better off a year if they
moved to market-based electricity contracts. It said there was enough
competition in the state's energy markets for price controls to be
removed.