The latest regulation of the default power price is expected to generate lesser competition
Origin Energy, the Australian listed public energy company, among other major energy retailers, has reportedly forecast a $44 million hit from the proposed regulation of a default market price for electricity. As per industry analysts and major investors, the regulation is estimated to create lesser competition consequently.
Apparently, the government’s attempt to drive cuts in power bills with the regulated electricity prices will expectedly cost energy companies over $100 million from the next financial year onwards. Reportedly, Energy Minister Angus Taylor and Treasurer Josh Frydenberg announced the plans for the default prices to be introduced on July 1.
Chris Ryan, the Chief Customer Officer at EnergyAustralia, was recently quoted stating that the company needs to work through the details of what the federal and the Victorian governments are currently planning to comprehend the potential impacts better.
Sources with the knowledge of the matter revealed that smaller retailers including Powershop, have not yet gained a chance for investigating the repercussions of the latest announcement. Sources further claimed that the regulated power price is being termed as one of the ‘raft of big sticks’ of the federal government for the energy sector, which has recently included new powers that led the government to break up the energy companies noted for misbehavior.
As per a report by The Sydney Morning Herald, Adrian Merrick, Chief Executive at electricity retailer Energy Locals, said that certain retailers have opposed to the default price model because if they violated any condition of the discounted offer, they would be stopped from pushing customers onto the inflated standing offers. According to a recent trading, Origin Energy’s share price has fallen by 2.9% from $7.63 to $7.41.
In a recent statement, Origin revealed that the government’s regulated price, which is known as the DMO (Default Market Offer), would help save around $105 per year on power bills to approximately 230,000 households, if it was passed.