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LIGHTS GO ON FOR ELECTRICITY CONSUMERS

From 1 July 1998 all electricity users in this state that consume more than 160 megawatts per year (fast food restaurants and service stations would fall into this category) will be entitled to buy their electricity from any licensed distributor or retailer, many of whom are offering very competitive prices and potential savings to their customers. Eventually, all electricity users will be able to choose their own supplier.

Before 1990, the NSW electricity industry was dominated by the Electricity Commission, which owned the generators and transmission network. About 28 distributors handled the local distribution, and the State Government set the electricity prices. Since then, the industry has gradually been broken up and corporatised. There are three generators in NSW who sell to the wholesale market. Transgrid operates the transmission network and there are now only six distributors which buy their electricity in the wholesale market.

For consumers, this means that they do not have to buy energy from the same company that provides the wiring to their house. Providing the price is right, a customer in New South Wales can buy electricity from a retailer in, say, South Australia, as an example.

As the industry becomes increasingly deregulated, more and more consumers will be offered individual contracts. The law governing such contracts allows plenty of scope for negotiation. Some of the factors to take into account when choosing a supplier include:

-Price. If you know what your electricity usage is, you will be in a stronger bargaining position. It also helps to know how your consumption varies during the day and from season to season. You can find that information from your old bills;

-Length of contract. If electricity prices are unlikely to rise and may in fact fall during the time of your contract, you may be better off with a short-term contract or an option to renew;

-Ancillary services – eg advice on energy efficiency, environmentally-friendly suppliers or a mix of low cost energy such as natural gas and electricity;

-Reliability of supply. Retailers and distributors could shift the liability for supply failures to each other and as such you need to consider carefully where you stand and how to prevent this type of "buck-passing";

-Dispute resolution. If disputes are likely, you may want to select a supplier that can resolve these swiftly and inexpensively.

Paul Bailey
paulb@gells.com.au