Electricity retailer competition and power prices in regional Queensland

Retailer competition

There are no regulatory barriers preventing market retailers from supplying customers in regional Queensland. However, the cost of supplying electricity to regional Queensland’s customers is greater than the cost to supply similar customers in Southeast Queensland (SEQ). This is largely because of the relatively fewer number of regional customers supplied electricity in regional Queensland, including via longer transmission and distribution lines.

Uniform Tariff Policy (UTP)

The Queensland Government has a long-standing commitment to ensure regional customers pay similar prices to customers in the South East. This policy is called the Uniform Tariff Policy (UTP). The UTP is designed to ensure regional Queensland customers are not unfairly disadvantaged by the inherently higher cost of supplying electricity to regional areas.

To deliver the UTP the Queensland Government pays a subsidy called the Community Service Obligation (CSO) to Ergon Energy, at a cost of around $500 million for 2021-22. The CSO represents the difference between:

The lower regulated prices, as set by the Queensland Competition Authority (QCA) considering the UTP, which Ergon must charge its customers; and
The higher cost of supplying electricity to regional and remote parts of the state.

The QCA estimates the UTP reduces bills for small customers in regional Queensland by approximately 10-50%, depending on where they live (and even higher for remote and isolated communities).

Because only Ergon receives the subsidy and is limited to charging regulated prices, commercial market retailers are less able to provide competitive offers to customers. However, some market retailers operate in some areas of regional Queensland, and provide market offers, such as to large business customers.

Independent online price comparator

For residential and small business customers seeking to compare the standard and market retail electricity offers generally available in Queensland, information is available on the Australian Energy Regulator’s independent online price comparator https://www.energymadeeasy.gov.au/. Customer’s may visit the website and search for offers by their postcode to identify retailers that may be able to assist.

Regional electricity prices

The Palaszczuk Government is committed to affordable energy prices for Queenslanders, which is reflected in its strong record in relation to electricity prices over the past decade. For regional Queensland, the Minister delegates the authority to set regulated prices to the QCA, under the Electricity Act 1994. This process ensures the prices are set by an independent economic regulator that can make calculations of energy costs and consult with stakeholders including customers and suppliers.

In 2021-22 regional electricity prices decreased for the fifth year in a row, with typical customers on all standard tariffs experiencing a decrease in their electricity costs. The 2021-22 price decrease represented the largest annual reduction in regional electricity prices in over a decade. This is on top of reductions in regional prices over the previous four years. However, the QCA’s draft pricing decision forecasts retail price increases for 2022-23.

More information about how regulated electricity prices are set in Queensland is available on the QCA’s website at http://www.qca.org.au/ or by telephone on 07 3222 0555.

Funding and assistance

The Palaszczuk government delivered a $500 million Utility Relief Package in response to the COVID-19 pandemic. This included $400 million in assistance to households with a $200 rebate on their bills, and $100 Million to almost 200,000 small businesses through a $500 rebate.

To further assist consumers, an additional $50 ‘Asset Ownership Dividend’ (AOD) payment was provided to households in 2020 and 2021 (for a total of five AOD payments provided by the government since 2018).