Energy Action, Australia's biggest business energy broker, says the draft Default Market Offer (DMO) and Victorian Default Offer (VDO) prices announced are an Australian calamity. They reflect the pass-through of export gas costs, weak competition, and ineffective regulation that has plagued the country.
Energy Action's Director, Bruce Macfarlane, said the price changes suggested by the Australian Energy Regulator (AER) and Victorian Essential Services Commission (ESC) are the result of a protected industry passing on costs that they are largely responsible for making. "The increase in regulated prices is a moral failure by regulators. Allowing windfall profits for those retailers with the foresight to connect customers to gas fields, while protecting retailers who didn't."
"Governments gas market intervention in December 2022 now has all retailers stopping supply of fixed price gas contracts. This next regulatory intervention can only lead to higher prices for the Australian businesses that are already feeling the sting. The need for East Coast gas reservation and gas export windfall taxes are the only macro levers available to drive prices down in the short term."
"Meanwhile businesses can react to this unbalanced regulation by using the only remaining lever - getting a competitive offer for their energy supply. To try to move profits from energy retailers back into their businesses.”
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