ACT electricity retailers want the regulator to raise prices to attract more utilities into the small territory market.
The Independent Competition and Regulatory Commission will determine new prices from July, and whether to include a ''competition allowance'' to make Canberra more attractive for energy companies to enter the market.
Electricity retailers say the regulator has been keeping prices too low and consequently deterring newcomers into the ACT market, which was opened for competition in 2003.
Associate professor of economics at the University of Canberra Dr Cameron Gordon said he could not see the logic in using higher prices as an incentive. Providing subsidies for investment may be a better way, he suggested.
''They are doing it, basically, backwards. They usually deregulate first in various ways, and there's lots of different ways you could do it, and then get competitors in and then see prices go down and quality go up. That's what you hope would happen.'' Up to 18 utilities have been licensed to retail electricity in ACT. Of that number, only three sell significant amounts, with ActewAGL supplying more than 90 per cent of homes and small businesses and 51 per cent of the large-customer market in Canberra.
In a submission to the regulator, ActewAGL proposed an increase in the new financial year to at least 6 per cent to the retail margin, in line with commercial benchmarks in other jurisdictions.
Environment and Sustainable Development Minister Simon Corbell does not share the retailer's view.
Mr Corbell said investigations had found price was not a barrier. The size of the ACT market, high consumer satisfaction with existing services and a well-known brand were keeping others out of the market.
He said the government was committed to deregulation but wanted to see more competition first. It disagrees with introducing a competition allowance.
ActewAGL said regulating prices in a competitive environment stifled competition, product innovation and delivered less than optimal outcomes to consumers. The utility said price regulation had already been removed in Victoria and South Australia, while Queensland had flagged deregulation in the state's south-east from July, and NSW may follow the same path.
The ACT's second-largest electricity retailer, EnergyAustralia, cites NSW's pricing and regulatory tribunal's view that ''for … a competitive market to develop while regulation exists, regulated prices must be high enough to create incentives for retailers to enter the market and compete for customers, and for customers to seek out better offers in the competitive market''.
Origin Energy said other jurisdictions had allowed for operational cost increases, whereas the ACT regulator had not made allowances, which was consistent with the lack of competition in the ACT.
The regulator's draft findings will be released on February 14.
It is also considering the impact and timing of the federal government withdrawing the price on carbon.