australia: March 25, 2008

The Victorian Government is expected to set a free-market benchmark for the national energy markets by abandoning price caps on electricity and natural gas sales. The move comes after extensive monitoring found the state power market to be highly competitive.

The elimination of price caps would be a big victory for major suppliers TRUenergy, AGL and Origin who have claimed that price caps restrict competition and increase red tape. Currently, the price caps are established annually by the government for small consumers who typically use less than 160 megawatt hours of electricity per year.

A recent survey found that competition is highly effective leading to discounts of up to 10 percent against standing tariffs for households and small businesses. The expected recommendation will be based on research that found Victoria has the highest rate of customer switching between energy retailers of any market in the world – surprisingly surpassing the United Kingdom.

Victorian Energy Minister, Peter Batchelor has stated that “I’d like to see all customers get the maximum benefit for a truly competitive market. If they are able to get reductions of up to 10 percent , then why shouldn’t they.”