This report examines the implications of  full retail competition in a dereguated electricity market, suggesting that there will be redlining or market exclusion of vulnerable households.

Redlining has been well documented in the insurance and credit industries in the United States, and is now a major concern in deregulated telecommunications, gas and electricity. Evidence of redlining has also emerged in the United Kingdom since deregulation of electricity. In Australia, the deregulation of telecommunications and banking has seen substantial changes that could be described as redlining. It is an economically rational strategy aimed at allocating costs onto customers who have the least capacity to avoid them, or to encourage low return customers to move to another supplier. In this way, a retailer can increase their overall rate of return.

This report recommends that there be a legal obligation to supply and that an anti-redlining consumer protection framework be developed for full retail competition.