EA Demands Smaller Retailers Meet Requirements

31 October 2011

Bad News for Consumers as Electricity Authority Demands Smaller Retailers Meet Onerous Prudential Securities Requirements

A decision by the Electricity Authority to retain the right of distributors to impose onerous prudential securities requirements on retailers will deter entry to the market, restrict growth and continue to tip the playing field in favour of the existing big retailers, says Pulse Utilities.

Managing Director of independent electricity retailer Pulse, Dene Biddlecombe says Code amendments confirmed by an Electricity Authority review still allow distributors the ability to require up to two months prudential security from a retailer. Generally five days notice need only be provided for the increased amount to be deposited or the retailer risks network access being terminated, usually within three days.

“This is bad news for consumers because if the prudential demands were not as high or arbitrary, we would see increased retail competition,” he said. “The interest rates payable are unlikely to deter distributors from seeking the maximum prudential level available. And, in any case, the rules will force small retailers to ensure full maximum prudential amounts are available should they be called upon which is a poor use of capital and places unnecessary constraints on commercial decision-making,” he said.

“This decision by the Electricity Authority is very disappointing and flies in the face of its mandate to reform the electricity market to create a level playing field which encourages competition and choice to benefit consumers. Instead it is another example of the Electricity Authority allowing the big boys to write rules that work for their own benefit.”

Mr Biddlecombe said that Pulse, the fastest growing truly independent retailer in the country at present, will continue to fight for change in the electricity market to win a fairer deal for consumers.

“While delays in the reforms and retention of the status quo may suit the big gentailers and lines companies, it leaves us, as a small independent player, disadvantaged and that stops consumers getting a fair deal.”

ENDS

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