Understanding Deregulation of Energy Market in Australia

If you’re not sure what deregulation of the energy market in Australia is, then you’re not alone. ‘Energy deregulation’ is a term that tends to get thrown around by politicians, but many Australian’s still aren’t entirely sure how (or if) energy deregulation will have any real impact on their lives. What is energy deregulation? Is it a good thing or a bad thing? Are all states and territories involved? And how will it affect you?

 

Energy deregulation 101

Back in the early days, Australia’s electricity and gas services were all constructed by the government. This made a lot of sense at the time – building the necessary infrastructure was expensive and the population wasn’t all that big, so it was going to be quite a while before the investment would pay off. No private companies were interested in being part of a market that would potentially take decades to turn a profit. So, each state or territory operated its own energy network, there was no competition and prices were was set by government regulators.

But times have changed – there is now real money to be made in the energy retail market, so during the last 15 years, the various state and territory governments have been moving towards energy deregulation – removing the restrictions on competition and pricing to allow private companies to enter the market. This has resulted in an influx of new power companies across Australia, all setting their own tariff rates and contract deals.

 

So, which states/territories have deregulated energy?

Because it’s a matter of state government, not all states and territories have the same levels of energy deregulation. For example, competition deregulation has already occurred in every state and territory except Western Australia (although there are exemptions that allow some WA residents to choose their own retailer). But price deregulation is a slightly more contentious issue and not all of the states and territories are fully on board with the idea yet. Victoria was the first state to deregulate energy pricing (back in 2009) and since then New South Wales, Queensland and South Australia have all followed suit.

 

Is energy deregulation a good thing or a bad thing?

Many people like the idea of regulated energy because they think the government will help to keep pricing under control. There’s a fear that as soon as a state or territory deregulates energy pricing the retailers will respond with uncontrolled price hikes. But the argument in favour of energy deregulation is that increased competition means lower pricing and improved customer service. If an energy retailer is offering you bad service and charging high rates in a deregulated market, then there’s no need for you to stay – you can just change to a different energy provider who promises to give you a better deal.

One undeniable benefit of energy deregulation is the ability to compare and switch retailers. If you’re curious about how your current energy provider measures up, then try using our free online comparison tool to see if you could be saving money.

Author: Bec Wilkinson
Bec Wilkinson is an ElectricityComparison.com.au News Contributor from Melbourne, Australia. Bec is a founding member of the Electricity Comparison news team.