Regulating conditional discounts

PIAC responded to the Australian Energy Market Commission’s (AEMC) consultation on regulating conditional discounting by energy retailers.

PIAC considers existing retail practices that rely on misleading, opaque conditional discounts from inflated or inconsistent base prices are leading to poor outcomes for consumers. We argue that recent market changes, such as the introduction of the Default Market Offer, have not fixed the issue of misleading retail pricing for many consumers, and as such we consider the principle and intent of the proposed rule change are appropriate.

We contend that discounts should be unconditional, and where they continue, should not be related to actions that are exclusionary or discriminatory.

As a preferred response, PIAC supports a variation of the approach proposed by the AEMC, where conditional terms including discounts or fees and charges are limited to the “reasonable costs” incurred by retailers as a result of the consumer behaviour to which they relate.