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Josh Frydenberg - Liberal for Kooyong
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Consumers to save billions on their power bills as Limited Merits Review legislation passes Parliament

Published: Monday, 16 October 2017

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The Turnbull Government has today passed legislation that removes the ability of energy network companies to appeal the decisions of the Australian Energy Regulator (AER), saving Australian households and businesses billions of dollars on their power bills.

The Limited Merits Review (LMR) process allowed network companies to contest decisions of the AER through the Australian Competition Tribunal. The Abolition of the Limited Merits Review Bill 2017 amends the Competition and Consumer Act 2010 to prohibit this process.

Since it was introduced in 2008, the LMR process has seen consumers pay $6.5 billion more on their energy bills than would have been the case if the AER’s decisions had been upheld.

With network costs making up to 50 per cent of the household power bill, the LMR process has only ever resulted in higher bills for consumers and increased revenues for energy network companies.

Energy network companies have appealed the AER’s decisions on 52 occasions and the courts have ruled against consumers 31 times. On not one occasion did the consumer benefit.

This new law puts an end to network companies gaming the system at the expense of consumers.

The preliminary report of the Australian Competition and Consumer Commission’s (ACCC) inquiry into retail electricity prices, released today, found network costs account for 41 per cent of electricity price rises.

On the Limited Merits Review, the report states, “Reviews sought by network operators have added billions of dollars to the cost borne by electricity users.”

The Turnbull Government is focused on delivering more affordable and reliable energy and the legislation passed today puts Australian households and businesses first.

The Turnbull Government believes the independent regulator is best placed to protect consumers from unnecessarily high costs, while still ensuring energy networks receive a fair return. To further strengthen the AER, we are providing an additional $67.4 million to help ensure it is sufficiently resourced.

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