Does competition in the electricity retail market necessary result in low prices and more satisfaction for consumers?
Marco Aurelio Lenzi Castro
Energy Market/Energy Transition/Regulatory Framework/Networks
It looks like the answer is no. Let see the Australian example.
The electricity market in Australia allows all consumers (such as residential, commercial, industrial) to choose their own retailer (among 33 options) and this 'competitive market' was supposed to bring lower energy costs and more satisfaction for consumers, but the opposite outcomes were found by The Australian Energy Market Commission (AEMC).
According to Retail Energy Competition Review 2018 study, consumer trust in the sector fell from 50% in 2017 to 39% in 2018, satisfaction with the level of competition fell by 6% to 43%. It is difficult for consumers to benefit from competition in the face of complex and confusing tariff structures.
In response, Federal and State Regulators are reforming their rules to protect consumers and establishing a standard base for retailer presenting their electricity prices and discounts. In the State of Victoria, the Government are evaluating the idea to reform the market and return to a regulate price scheme.
Therefore, many Countries like Brazil that are trying to open their retail market (by persuading the Regulator, the Ministry of Mines and Energy and Policy Makers) and introduce ‘competition’ in the retail market to reduce the prices for consumers should study the Australian case, learning with their experience and do not repeat the same mistakes.
The full study is available at https://2018.aemc.gov.au/competition-review/
Founder and CEO at Solfácil
6 年Standardizing the way the utility bill is presented to consumers would be a huge win, specially when it has distributed solar. It is almost impossible to explain to a consumer the numbers of his bill. In the end, he has to give you a leap of faith.
Renewable Energy Project Engineer
6 年Falling consumer satisfaction is hardly ever the result of the freedom of choice. It is the direct result of the increasing energy prices. And electricity prices have increased in Australia not because of the liberation of the retail market but because of the transitioning from coal to more expensive renewable sources. Let us beware of not mixing up cause and consequences.