Origin Energy introduces electricity competition to regional Queensland
Sydney-based Origin Energy will offer electricity plans to residents in Townsville, Cairns, Toowoomba, Mackay, Bundaberg and Maryborough, areas traditionally monopolised by the state government's Ergon Energy.
But households with solar will be left out of the plan.
Solar not included
Queensland has the highest rate of household solar installation in any Australian state or territory, with more than one in three Queensland homes hosting solar panels.
More than a third of Queensland households have solar.
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ABC News: Glyn Jones
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Origin Energy's general manager of consumer, property and retail, Duncan Permezel, said the company was not offering plans for solar households because it was still working with the Queensland Competition Authority (QCA) on solar tariff pricing.
"Hopefully we'll see a solar offer being made available soon," he said.
"But that will take some time to work through with the QCA and the Queensland government."
New player in the market
Ergon Energy operates as the distributor in rural and regional Queensland, transporting electricity from powerlines, underground channels and wires to customers.
Profit results from AGL and Origin have prompted calls for more to be done to reduce electricity and gas prices.
Electricity retailers, such as Origin Energy, purchase electricity from the wholesale market and sell it to homes and businesses.
The number of retailers has grown in south-east Queensland, but Ergon Energy has remained the only option for regional customers.
To offset price gouging, the Queensland government pays a Community Service Obligation to its own company, Ergon Energy, of $600 million to ensure regional customers pay the same regulated prices as consumers in south-east Queensland.
This subsidy makes it hard for other energy retailers to compete with Ergon Energy's subsidised prices.
Mr Permezel said this was why the company was initially offering limited products.
"We think we can offer electricity and other value adds to consumers, but we would love to see that subsidy extend so that we can offer more services and talk to the full region," he said.
Shaking up the monopoly
Central Queensland University resource economist John Rolfe said competition could benefit consumers and had worked in other states.
Origin Energy is shaking up regional Queensland's electricity market.
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ABC News: Matt Roberts
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"Competition is a wonderful thing in terms of helping customers to have a little bit of choice and finding options that suit," he said.
"Competition helps to provide some confidence to customers that they are getting reasonable deals because they can then shop around and compare prices from alternate suppliers."
Professor Rolfe said a monopoly — where one operator sold to the whole market — would usually lead to higher prices, but government subsidies had avoided that.
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While Origin will not have access to subsidies, it will not have the contractual Community Service Obligation to service all customers like Ergon Energy does.
"They've [Origin Energy] focused on the bigger regional centres … so it's probably relatively low cost for them to roll out to these extra cities and they've obviously done the sums and think it's worthwhile," Professor Rolfe said.
"Whether they get a big enough customer base coming across to them to make it really remains to be seen."
Professor Rolfe said if Ergon Energy lost a high percentage of customers, it would impact its revenue.
"The quid pro quo is that it's going to increase the cost for Ergon and make it harder for them to maintain that uniform tariff/customer service obligation," Professor Rolfe said.
"So, it will increase their overall cost base and reduce their revenue."
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