Interview with Leon Byner, 5AA Adelaide
LEON BYNER: Well we know that the Federal Government have been able to be the conduit for a rule change where power retailers who you deal with, are now going to be forced by law as of next year - these things seem to take so long - anyway, the rules as of February mean they've got to give you five or six days' notice if they're going to put your prices up. We've got the Minister on the line. I'm very pleased to say that he's made himself available today. Before we get to Angus Taylor - Angus, good morning and thank you for coming on - I want to play you one of the comments made that was agreed with by SACOSS chief in SA Ross Womersley. We spoke to Bruce Robertson about this, and we asked him how will this affect customers and this is what he told us.
BRUCE ROBERTSON - EXCERPT: Well it's a total hoax being perpetrated by the government on the consumers of South Australia. It's a total hoax, Leon.
LEON BYNER: What do you think of that?
ANGUS TAYLOR: Well I'm not sure what he's referring to, but if he's referring to the rule change, the crucial thing here is we know if people ring around or simply negotiate with a retailer, typically they can get a better price. The point here is if they're not given warning that the retailer is going to change their prices, they don't know to do that ring around - they don't know to actually ring up and ask for a discount. It is very, very clear that the retailers have been pushing people’s standing offers - as they're called - up, which is the price you get if you don't actually ask for a better one. They've been pushing them up for years and we want consumers to be armed so that they can ask for discounts. As I say, if you haven't done it, if you haven't asked for a discount or you haven't shopped around and gone to a different retailer to ask for their price they're prepared to give you, there's every chance you can get a very significant discount that you haven't yet tapped into.
LEON BYNER: Alright, now let me explain the situation as I understand it - I mean you'd be across this - just to put this five days, six days' notice in context. It goes like this - you get your five or six days, you then shop around and you decide that you're going to go to another energy company. You're aware of course aren't you, that you have to wait a full bill cycle before you can change?
ANGUS TAYLOR: Yes. There will be a period before you can change but you're going to get a discount when you change. The truth is you don't necessarily need to change. I mean, if you ring up and say to your retailer: ‘I'm going to change if you don't give me a better price’, the chances are you'll get a better price. That's the truth of it. The thing is, is that what we haven't done is arm people with the knowledge they need to be able to go and ask for a better price. There's a good website they can go on to - Energy Made Easy - that lays this out for them but the thing is is that we're not used to having to ask for this to get a better price. What we're saying to people is you can do that, you now have a trigger to do that, and it's very important that you actually, if you're a household or a small business and we know how busy everyone is and small businesses are really stretched to find the time to do this, just pick up the phone and say to them: ‘Hey, this is not good enough. I want a better price’.
LEON BYNER: In the context of we're going to give you a few days' notice, why not legislate it much earlier so that knowing the practicalities are that you have to wait a full bill cycle, you can actually advantage the discount much more quickly - why would you have done that?
ANGUS TAYLOR: There is other changes that we're making that we're working on right now that will be important in this and it's very important to understand these. So these standing offers which are the prices that you get if you haven't negotiated - and that's where people get duded, frankly - we are working right now on regulation or legislation as the case may be to ensure that those prices are better.
LEON BYNER: How are you going to do that?
ANGUS TAYLOR: We're simply asking for it. We have said already, we've said government policy now is that the retailers will have to do this and if they don't do it, there will obviously be implications for them. We have not hesitated in taking the ACCC's recommendation to do this which is where this idea came from, that there will be a single market price out there that every offer will be benchmarked against, and that people can know that if they're not getting that price, then they can call up and complain to the regulator. So this is a very, very important change. We're working it through now and the five-day warning - which is one of a whole series of initiatives that we are putting in place to make sure people don't get dudded.
LEON BYNER: Just a question here and I've wondered this for a while - as you know, the Rudd Government years ago introduced unfair contract law which basically said that if there is an agreement between two parties and on one side of the agreement it is so weighted towards them against the other side, the contract can be set aside.
ANGUS TAYLOR: Yes.
LEON BYNER: Frankly, many of the energy contracts that people have signed would come into that category. Why have we not turned around and said: ‘No, this is not lawful’?
ANGUS TAYLOR: That's a fair point and of course the trouble is an individual, small business or a household who wants to sue a big energy company for an unfair contract, it's a pretty tough course to go down, which is why we're changing the rules, we're changing the regulations, even changing the law to make sure they don't need to go down that path of taking a big energy company to court for unfair contracts. That's a pretty tough way to do it. There's a better answer here which is the big energy companies just have to offer a fair deal, they have to provide warning if they're going to make any changes and that if they don't offer a fair deal the regulator will crawl all over them. So that's where we're going. As I say the ACCC recommended this approach and we will be putting it in place as quickly as we possibly can.
LEON BYNER: Angus, on this business of energy prices generally how much do you think they're going to come down? Because there are many saying we don't have an energy policy and if we do can you simply explain it?
ANGUS TAYLOR: Well there's a lot of people out there, particularly on the other side of politics who think lower prices is not an energy policy. Well let me tell you lower prices is an energy policy-
LEON BYNER: Achieved by what means?
ANGUS TAYLOR: -as is keeping the lights on of course. That is the core of our energy policy.
LEON BYNER: Yes, but it's the way that you do it though. So-
ANGUS TAYLOR: Right. There's three parts to what we're doing here and this is absolutely crucial. The first is stopping the big rip offs from the big energy companies and this rule change, as with many others that we're putting in place, is ensuring that that happens. We're also establishing, as I said, this default market offer, so that if you don't have time to negotiate you're still going to get a fair deal. The third piece is we are backing in new investment. We've said we will make sure that there's enough investment in the capacity in the market, in the generation in the market, to ensure that people get a fair deal and we keep the lights on, we're working that through now, but that means the federal government will play a more active role in making sure the investments happen and Lord knows, South Australia needs that more than almost anywhere where you've had a lot of capacity withdrawn from your market. You've had too much intermittent generation - this is mostly wind, but also solar, that hasn't been backed up, hasn't been firmed up to make sure it's a reliable supply. You've got 600 megawatts of wind, that's a huge - it's close to a billion dollars of investment that is curtailed most of the time, it's not being used because no one thought about making sure this was going to be an effective part of your system. So all of this has been driving up the price. We through those three areas - stopping the big rip offs, the default market offer and backing new investment - are driving that down while we keep the lights on. That's energy policy.
LEON BYNER: What do you think of Di Natale's idea from the Greens to have a people's energy company that doesn't make a profit, that gets into the market, competes and forces prices down?
ANGUS TAYLOR: We have two retailers now that are 100 per cent owned by the Government through Snowy Hydro. I don't understand what he's saying. Those two companies, Red and Lumo, who are both owned by Snowy Hydro, they are in their everyday working to get prices down. The information they give us about what's needed to get prices down is absolutely crucial and is driving many of the initiatives I've just described. So I don't understand where he's coming from because we have it.
LEON BYNER: One final question. It's recently been announced that on a day when the interconnector was under repair, energy companies gamed the system and made $28 million in a day. Are you going to stop that?
ANGUS TAYLOR: Well, the market manipulation that is alleged to have occurred on a number of instances, the closure of Hazelwood and others and I don't want to get into of making illegal accusations-
LEON BYNER: Sure.
ANGUS TAYLOR: But I do want to say that any kind of market manipulation is unacceptable. We will be putting legislation in place to make sure that cannot happen in the future. We're certainly asking the regulators to monitor any alleged instances of market manipulation. This is a utility service every Australian household and small business needs to buy, and to behave in a way where they're ripping off consumers is completely unacceptable. I'll tell you what, we will take any instance of it and we will do everything we can to make sure it doesn't happen again.
LEON BYNER: Angus Taylor, thanks for joining us.
ANGUS TAYLOR: It's a pleasure.