People in insecure housing to lose out from IPART’s steep exit fee cap

“People in insecure housing are going to lose out as a result of IPART’s decision to cap electricity early termination fees at a whopping $130[1],” said Senior Policy Advisor, Amelia Christie.

“People living in insecure housing, particularly renters without a lease, can be unable to predict whether their housing contract will be terminated and because electricity contracts are usually tied to the property not the person, customers who are likely to be living on lower incomes may be forced to pay a fee they can’t afford.

“It makes no sense that Victoria has a cap on early termination fees of $20, vastly lower than the $130 that NSW residents will be facing should they exit their contract within 12 months. It’s the same good and often the same electricity companies operating in each state so why are they allowed to charge people in NSW $110 more?

“CPSA fears that with a cap this high, we’ll see retailers competing on the level of early termination fee rather than price. This scenario will see most consumers losing out as the majority of customers who remain with their contract for the entire duration will not benefit should this occur.

“Electricity is one of the few jurisdictions in which the price can change over the course of a contract. For most other contracts, such as telephone contracts, customers sign on for a fixed term at a fixed price but for this essential service it can go up soon after signing up. CPSA upholds that customers should not be penalised for switching for a better deal”, said Ms Christie.

Media contact: Amelia Christie, Senior Policy Advisor

Phone: 0410 612 182.