From the 13 of January 2002 nearly five million households in Australia’s two biggest states will be able to choose their energy supplier.

Domestic customers and small business in New South Wales have been able to choose their electricity and gas suppliers since January 2002, while consumers in Victoria have to wait until the 13 of January to take advantage of the deregulated electricity market, and will have to wait another year before the gas market is fully opened.

Other states in Australia my have to wait a considerable amount of time before their energy markets are fully opened to competition.

Queensland’s deregulation plans are off the agenda at the moment, while the South Australian government plans to reassess it’s plans for a January 1, 2003 start after evaluating the success of the New South Wales and the Victorian market. Western Australia and Tasmania are not expected to open their markets for some time.

The reaction to the new liberalized markets in New South Wales and Victoria has been lass than spectacular. Part of the problem in Victoria is the cap on electricity prices that was recently enforced.

The state’s five existing residential retailers – CitiPower, Pulse Energy, Australian Gas Light (AGL), Origin Energy and TXU – have been restricted to price rises of between 2.5 and 4.7 per cent, substantially less than the increases they sought.

The price cap means there isn’t much leeway for companies to start aggressively discounting (as) the ceiling is so low,” said Ian Israelsohn, assistant director of regulation and taxation at the Electricity Supply Association of Australia.

However, he does predict that the introduction of full gas contestability will boost interest from customers, allowing suppliers to package deals on both services. “Apart from the price, they’ll be marketing, building a brand, finding little sweeteners to lock customers in.”