PIAC responded to the Australian Energy Regulator’s (AER) request for input into the implication of COVID-19 on the Default Market Offer (DMO) determination for 2020-21.
We highlight the COVID-19 crisis will impact retailers’ operating costs in a number of ways, likely resulting in a net reduction. A drop in energy consumption across the NEM will likely depress wholesale energy costs; network prices for residential customers will fall due to the revenue cap on network businesses alongside increased household energy consumption; and an increase in the number of customers on payment assistance may add costs, although government supports may mitigate this.
We recommend the AER revise down the DMO determination for 2020-21 to reflect these expected net reductions in retailers’ costs.
