Energy prices could be capped for an entire YEAR as regulators look to crack down on sneaky 'bait and switch' electricity deals
- Proposal put forward to cap energy prices for 12 months after signing contract
- Suggestion is a recommendation from discussion paper released on Wednesday
- Proposal would apply to Victorians who sign contract with an energy supplier
- The reform comes after energy suppliers caught using 'bait and switch' tactics
Homeowners could enjoy fixed energy prices in certain parts of Australia as authorities crack down on 'bait and switch' tactics.
Victoria's Essential Services Commission (ESC), the state's energy regulator, suggested the change in a discussion paper released on Wednesday.
Under the proposal, which could be rolled out next year, Victorians would enjoy a set energy price for 12 months starting from the moment they sign a contract, The Age reported.
'Bait and switch' tactics involve energy companies signing customers up for a cheap deal before hiking their prices.
The proposed sweeping change come as the energy regulator tries to tamp down on suppliers luring them in customers with cheap deals before ramping up initial prices (stock image)
Among the list of recommendations are also new conditions requiring customers to be informed about how long prices will be on offer without change, and moving them onto a similar contract at the end of the term.
The proposed sweeping change come as the energy regulator tries to tamp down on suppliers luring them in customers with cheap deals before ramping up initial prices.
Only last year, energy retailers like Sumo, admitted it had brought in customers on an 'acquisition' rate before hiking up the prices, The Age earlier reported.
Customers were slugged with price hikes of 55 per cent or more, and in one case up to 70 per cent.
Correspondence between the complainant and a Sumo employee claimed it to be 'common' practice.
'It is common for retailers to offer 'acquisition' rates to new customers in order to entice people to sign up,' the employee wrote.
'The rates are then subject to change at any time. This can occur soon after sign up, or after several months.'
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The Australian Competition and Consumer Commission outlines laws in place to protect consumers from false or misleading claims - of which 'bait and switch' like tactics are illegal in most jurisdictions.
Under current energy rules in Victoria, an energy supplier can change prices of energy bills for existing customers, after drawing them in with a competitive rate.
Though come July 1, reforms will be introduced across the state to create transparency.
Customers must be informed if their contractor has a better offer than their existing deal.
They must also be notified of any changes to prices or benefits that may impact them.
Customers must also receive a fact sheet, comparing the contracts from other retailers.
Victoria's Essential Services Commission (ESC), the state's energy regulator, suggested as much after it released a discussion paper on Wednesday (Pictured: Loy Yang B power station in the LaTrobe Valley in Victoria)
The commission's proposals will be open for consultation until early next month and the approval date set for December.
If all goes well, the changes could be brought in as early as July 2020.
ESC energy director Sarah McDowell said she hoped the reforms would restore trust in homeowners.
'I think in terms of the broader reforms program, ultimately what this is about is restoring trust in the market and giving consumers confidence that the market can work for them,' she said.
'If they do seek to engage they can get a fair deal and enter into a contract knowing their prices won’t change over the coming period.'
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