Energy markets in Australia are either regulated or deregulated – and this can have a major impact on your energy bill. With the cost of living on the rise, it’s important to understand how much we pay for power and why. In this article, Canstar Blue explains regulated energy markets across Australia and how they affect your energy costs.
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If you are interested in comparing energy plans, use the free Canstar Blue tool below:
Here are some sponsored deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid energy network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
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11% Less than reference price |
$1,614 Price/year (estimated) |
Go to Site |
Here are some sponsored deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
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10% Less than VDO |
$1,304 Price/year (estimated) |
Go to Site |
Here are some sponsored deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from our referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area and to see other products in our database that may be available. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
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4% Less than reference price |
$1,990 Price/year (estimated) |
Go to Site |
What does a ‘regulated energy market’ mean in Australia?
You might be familiar with energy deregulation, but what about regulated energy markets? In Australia, a regulated energy market refers to a system in which:
- only state- or territory-owned energy retailers can operate, or
- state or territory governments set regulated energy prices.
Western Australia is the only state or territory that regulates both retail competition and prices.
Regulated vs deregulated energy markets
Differences between regulated and deregulated markets are simple. The state or territory government controls energy pricing and competition in a regulated energy market. In a deregulated market, the government lets energy retailers compete by setting their own prices and tariffs.
There is a caveat to energy market competition, though. Despite deregulation energy retailers in New South Wales, South East Queensland (SEQ), the Australian Capital Territory and South Australia are required to offer basic plans at prices aligned with the Reference Price or Default Market Offer (DMO). The same occurs in Victoria with the Victorian Default Offer (VDO).
It’s important to note that a ‘deregulated energy market’ doesn’t mean that market isn’t subject to regulatory framework designed to protect consumers. In Victoria, the Essential Services Commission (ESC) regulates the energy market, while in SEQ, NSW and SA, the Australian Energy Regulator (AER) does the same. The ACT and Tasmanian state governments are the regulators of their local energy markets.
How does energy market regulation differ across Australia?
The energy market comes under state or territory jurisdiction, meaning regulations will vary across borders. In NSW, Victoria, SEQ and SA energy markets are completely deregulated. Private retailers can enter the market and set their prices. In other states price regulation may exist but not for competition.
Residential electricity regulation by state and territory
Below is an energy regulation breakdown across Australia.
| State | Competition regulation | Price regulation |
|---|---|---|
| Western Australia | Yes | Yes |
| Tasmania | No | Yes |
| Australian Capital Territory | No | Yes |
| Northern Territory | No | Yes |
| Queensland | No | Yes (only outside SEQ) |
| New South Wales | No | No |
| Victoria | No | No |
| South Australia | No | No |
Energy regulation in Western Australia
Western Australia has two types of energy customers in its South West Interconnected System: Non-contestable and contestable. Energy usage determines which category West Australian households fall into, not the region they live in.
Non-contestable customers use less than 50 megawatt-hours (MWh) a year and are typically households and small businesses. They don’t have a choice of power provider; these customers are supplied by state-owned Synergy and pay government-regulated electricity rates. Contestable customers use more than 50 MWh a year and are typically large businesses. They have a choice of a dozen electricity retailers.
With the exception of a few Perth metropolitan areas, the Western Australian gas market is deregulated. Households have a choice of gas provider and providers are free to set their rates and fees.
Energy regulation in Tasmania
In 2014, Tasmania introduced energy retail competition, allowing more power companies to enter the market. Though it wasn’t until 2019 that another provider entered the local market. Several other retailers have since expanded to Tasmania, with Future X Power, Energy Locals, CovaU, Glow Power and GEE Energy also making a move off the mainland.
Residential customers can pay regulated electricity and gas prices through state-owned Aurora Energy or enter a market contract with a different retailer. Competition has been good news for Tasmanian households, as new retailers typically charge less than government-regulated prices to encourage customers to switch.
Energy regulation in the Australian Capital Territory
Electricity competition is deregulated in Canberra, but electricity prices remain regulated. ActewAGL – owned by the ACT Government and AGL – rules the residential retail market with an overwhelming market share.
The ACT Government offers customers two options for electricity and gas contracts: Regulated electricity rates set by the government or market retail contracts. Market retailers can set their own deals, which may include discounts, different conditions and additional fees.
Energy regulation in the Northern Territory
The NT has regulated energy prices for households. The government sets electricity costs, which providers must pass on to consumers. Deregulated pricing is only available to businesses that use more than 750 MWh of electricity a year.
The territory introduced energy retail competition in 2010 but only a handful of providers have expanded into the market. This is likely due to price capping or because only customers with a smart meter have the opportunity to switch. State-owned Jacana Energy continues to dominate the NT market.
In the absence of mains gas a deregulated, competitive market for natural gas doesn’t exist in the NT.
Energy regulation in regional Queensland
South East Queensland is a deregulated energy market. However, the situation is different in regional Queensland. While technically open to competition households in Mackay, Townsville, Cairns and other regional locations only have access to Queensland Government-regulated electricity and gas prices.
State-owned Ergon Energy is one of the few energy providers in regional Queensland and the only provider to receive Queensland Government subsidies. Ergon holds the vast majority of the regional Queensland market. Other providers are welcome to up north but these providers are required to charge the same prices as Ergon without the advantages of subsidies or market share, which reduces commercial viability of other energy retailers.
New South Wales, South East Queensland and South Australia
NSW and SA have fully deregulated electricity and gas markets. Queensland is divided, with the South East deregulated and regional areas regulated. In NSW, SEQ and SA households have a choice of power provider and energy companies are free to set their rates.
However, retailers must also adhere to a government-regulated Reference Price or price cap. This is the DMO we referred to previously.
Victoria
Victorian households can choose their power company and rates. Although the energy market is fully deregulated, providers must offer customers a state-regulated plan, known as the VDO. When marketing their other offers, retailers must compare plans to the VDO.
Pros and cons of a regulated energy market
There are pros and cons to being part of a regulated energy market in Australia.
Regulated energy market pros
- Price safety net
- Stable energy prices
- Predictable rate changes.
Regulated energy market cons
- Little price competition
- Retail monopolies
- Little incentive to offer discounts.
Should you select a regulated energy offer?
In some states and territories, such as the ACT and Tasmania, regulated price electricity contracts are available. Be aware that these offers aren’t always the cheapest in the market, so do your research to make sure you’re getting a good deal.
Image credit: Miha Creative/Shutterstock.com
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