'Missed opportunity' to act on power plan loyalty tax

The Australian Energy Market Commission wants to "shine a light" on the problem to nudge more consumers to switch, including forcing retailers to notify long-term customers of foregone savings.

Tallies of how many customers are overpaying by failing to shop around should also be made public.

Consumer and small business groups, including the Council of Small Business Organisations Australia, CHOICE and Financial Counselling Australia, labelled the proposal a "massive missed opportunity".

The loyalty tax was a trap for households, small businesses and even retailers, Energy Consumers Australia chief executive Brendan French said.

"Just to keep their market share, retailers will offer unrealistic low prices - which they then need to hike up, often by 20 per cent or more, within a year," Dr French said.

"What's worse, they fund these low prices by charging loyal customers more."

Retailers could not afford to break this cycle, he said.

Ideally, the commission would have recommended tougher regulations to prevent "the race to the bottom".

Commission chair Anna Collyer said shining a light on poorly-behaving retailers was an effective tool. 

"If you stay with your retailer, say for three or four years, you could be paying up to $300 more than someone who has just joined that retailer," she told ABC Radio.

"We don't think that's acceptable business practice."

The Australian Energy Council, representing retailers, welcomed efforts to reduce complexity and boost transparency.

"We support creating greater clarity and awareness of savings customers can make as well as improving and developing better comparison tools," chief executive Louisa Kinnear said.

"It is important however, that proposed changes don't place additional obligations on retailers while also limiting their ability to recover their costs."

Network tariffs, which cover the costs of poles and wires and contribute roughly 40 per cent to bills, have also been in the Australian Energy Market Commission's sights.

Network pricing has traditionally been linked to electricity consumption, which made sense when electricity was transported from large coal-powered stations to customers in a one-way system.

But today, millions of households are generating power on their rooftops, batteries are booming and electrification is well under way, allowing many to use less grid electricity and therefore pay less for network costs.

While providing savings for solar-equipped households, it has left a shrinking pool of customers - including renters and other groups locked out of the tech - paying more for the network.

Ms Collyer said those investing in solar, batteries and electric vehicles were already reshaping the grid for the better and the guidance for reforming tariffs "catches up with what they have built, and rewards them properly for it".

Network tariffs should create more targeted opportunities for battery owners to be rewarded for the value they provided to the grid, she said, including easing pressure at peak times

The rule-maker also wants to shift household bill complexity onto retailers and energy service providers. 

The goal: electricity priced as simply as milk in the supermarket.

"You do not get separate bills for the cow, the carton and the transport," Ms Collyer said.

"You get one simple shelf price."