Electricity retailers have acknowledged the industry must change to restore trust with the community as Environment and Energy Minister Josh Frydenberg warned the government could introduce tougher laws to protect consumers.
A report released by the Australian Energy Market Commission on Friday found consumer trust in the sector fell from 50 per cent in 2017 to 39 per cent in 2018. This level is lower than for the banking and telecommunications industries.
Energy retailers told Fairfax Media they understood why consumer confidence in the sector had waned amid confusing discounting practices and high prices.
The major retailers have been driving prices down over the past few months in response to consumer unrest and falling wholesale energy prices. They announced cuts to their 2018 prices from July for every state except Victoria, which introduces price changes in January.
AGL chief executive Andy Vesey told Fairfax Media his company has been working towards overcoming the issues highlighted in the report.
"When people are feeling the burden of high prices they have every right to question the market but the fact is a lot of the recommendations that are in that report are things that we’ve been advocating for a while," Mr Vesey said.
Origin chief executive Frank Calabria said the company wants to work towards wider energy reform.
“We welcome efforts to reduce complexity, improve transparency and encourage greater participation in retail energy markets, which will lead to more informed, engaged and ultimately more satisfied customers," he said.
“We see no competitive or commercial benefit in having confused or disengaged customers, and will continue to work hard to win back their trust and deliver the benefits of competition to more Australians."
EnergyAustralia's head Catherine Tanna said the industry needs to demonstrate change.
"When we think about trust in the sector, we don't expect customers to trust us just because we've asked them. It's about taking action and showing them why they should trust us, which is why we've dropped our power prices," she told Fairfax Media.
Mr Frydenberg said the government may be willing to take - as yet - unspecified action to address the report's concerns.
“The companies have not served their customers well, they have a lot of explaining to do, and they need to lift their game,” Mr Frydenberg said on Sky News on Sunday.
“It’s not enough. We want to see prices come down more.
“I’m not going to foreshadow any particular actions that the government may or may not be taking other than to say that the companies are on notice.”
The last action the government took against energy companies was threatening to enact the Australian Domestic Gas Security Mechanism, which would have placed restrictions on gas exports.
Energy companies have already raised concerns over potential government intervention over high electricity prices.
“The entire industry – the networks, retailers, generators and transmission – need to work together to avoid further political intervention,” energy retailer Powershop’s chief executive Ed McManus told Fairfax Media at the Energy Networks 2018 conference.
“Eventually, political patience will run out and when it does we’ll see some intervention into the market.”
Mr Frydenberg said he is waiting for the Australian Competition and Consumer Commission into the energy network, and wholesale and retail prices before any action may be taken.
The ACCC will deliver the report to Treasurer Scott Morrison before the end of this month.