This submission responds to the Independent and Pricing and Regulatory Tribunal’s (IPART) Issues Paper, Early Termination Fees Regulating the fees charged to small electricity customers in NSW. PIAC has argued in a number of submissions that base early termination fees (ETFs), which exclude the cost of any inducements offered to customers, should be banned. In PIAC’s opinion, such ETFs have a negative impact on competition. While holding to this primary position, PIAC acknowledges the premise of this review is to set a base ETF. In light of that, PIAC makes a number of comments related to: IPART’s proposed approach in choosing which costs to include in the base ETF; how those selected costs are calculated; the impact on the market of making a base ETF too low or too high; the option or requiring all retailers to offer a contract without an ETF; and, permitting retailers to recover only the true cost of any inducements, not a recommended retail price, which may be higher. The submission recommends that because the costs associated with early termination are low, any ETF cap should be set no higher than $20, the level set by the Victorian Essential Services Commission.
