Power prices likely to remain stable

POWER prices will remain flat for "mum and dad" customers when full competition is introduced in Tasmania's residential energy market next year, Aurora Energy's outgoing boss Peter Davis predicts.

Tasmania's Economic Regulator will this week finalise power prices for the next six months and the safety net tariff to apply when competition is introduced from July 1.

Prices had been expected to fall 5.23 per cent next month, but the regulator was forced to reassess after the collapse of the sale of Aurora in September.

According to Aurora's submission, it will still be possible to achieve a similar reduction in the first half of next year.

Beyond that, it's less clear what the impact will be on prices when big players can attempt to poach Tasmanian customers from Aurora.

The regulator will determine a maximum price Aurora and any new entrants in the market can charge.

"The indications are that that would be pretty flat, we don't expect to see the price rises continuing to come through," Dr Davis said.

"And whether retailers are able to offer special products that reduce costs a little bit we might see some downward pressure due to retail competition."

He is warning customers not to expect dramatically cheaper options as about 90 per cent of the costs are fixed.

It has been a tumultuous six months for the state- owned company and its 1000 employees after plans to split the retail business in half and sell it to two competing companies fell over in September.

Aurora's distribution arm will still merge with Transend while a state- owned retail business will continue to operate as a stand-alone company facing competition from July 1 to be known as Aurora Retail.

Dr Davis likens the dramatic turnaround to a car race.

"We were effectively building two race cars to support two new retailers and they were coming up to speed and they were going round the track pretty fast because they had to be ready on the first of January," he said.

"Then late in September we found out actually we need to take those two cars off the track and we had one in the pits, which was the Aurora Retail one, and we need to get that one out and get up to speed."

The structure of the new "lean and mean" small business is yet to be finalised but Dr Davis expects it will retain just 120 to 150 people.

Dr Davis has decided not to continue in his role at the new business and a new chief executive is expected to be appointed this week.

Premier Lara Giddings and Energy Minister Bryan Green last week issued a statement of expectations, which sets the direction of the new Aurora Retail.

"That makes it pretty clear we've got to run an efficient business, focus on customer prices, minimise risk," Dr Davis said.

He has no doubt the big energy players will enter the Tasmanian market, which he predicts could take up to 30 or 40 per cent of Aurora's customers.

Dr Davis said there was no set amount of customers that Aurora needed to retain to remain viable.

He hopes the strength of the Tasmanian brand will help the business to hang on to residential customers, just as it has maintained 90 per cent of business customers whose contracts were up last financial year.

"I think there's every indication we can be successful in this FRC environment," Dr Davis said.

While 450 Aurora field staff were told last week they would transfer directly to the merged business TasNetworks, hundreds face an uncertain Christmas.

Aurora has hired consultants to provided resilience training to managers and career coaching and advice on updating resumes and job interview techniques for about half its staff to help them cope with the transition.

Most remaining staff will learn their fate when the structures of Aurora Retail and TasNetworks are finalised in early March.

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