Energy retailer reveals carbon repeal price reductions lower than government claims

Australia's biggest energy retailer, Origin Energy, adds to government embarrassment over carbon tax cost of living impacts, offering electricity and gas savings out of step with government claims.

The largest energy retailer in the country, Origin Energy, says it will pass on savings to households from repeal of the carbon tax, but less than the government has claimed.

The company, which has 4.3 million customers, said savings on household energy bills would vary.

"Our initial modelling estimates savings for an average Origin household energy bill, weighted across our entire customer base, of around 7 per cent for electricity and 5 per cent for gas, but individual households will save more or less depending on their location, tariff type and how much energy they use," the company said.

This is lower than what the government is claiming which is a 9% reduction on electricity bills and 7% in gas.

Origin CEO Energy Markets, Frank Calabria said, “Origin has started a program to update its billing systems with revised usage charges that exclude the carbon price. Customers will start seeing the new prices on their household energy bills from September, and these will be backdated to 1 July".

Energy prices for business and commercial users will be subject to the repeal legislation and contractual arrangements with Origin.

This news is likely to come as a major embarrassment to the government, which has suggested large savings to consumer’s electricity bills from repeal of the carbon tax. The government claims of bill savings have also been undermined by the fact that households now consume significantly less electricity than the government has assumed in its bill saving calculations.

Their estimates also fail to account for the fact that a large proportion of households now have solar systems and will end up receiving less for the electricity they export to the grid. This could mean these households with solar systems, which make up as much as 20% to 30% of some states' detached and semi-detached housing will be worse off with repeal of the carbon price.

The government has also come under fire for the fact that its repeal legislation only targets electricity and gas suppliers for attention from the ACCC to pass on carbon tax savings.

While in opposition, the Coalition had claimed the carbon tax would have significant cost impacts on range of consumer items such as groceries, new homes and airline tickets. Yet major supermarket operator Woolworths as well as Qantas and Virgin airlines have said they will not be reducing their prices as a result of the repeal of the carbon price.