The ACCC is commencing a new inquiry into the supply of electricity in the National Electricity Market and is consulting on how it will undertake this role.
The ACCC has been tasked with monitoring and reporting on the supply of retail and wholesale electricity in Queensland, NSW, Victoria, South Australia, Tasmania, and the ACT, until 2025. It will have a focus on monitoring prices, profits and margins, including the effect of policy changes in the National Electricity Market.
The ACCC will report, at least every six months, on information it obtains from energy companies, including the prices customers are paying for electricity and the underlying factors for any significant price movements.
The ACCC will be looking to use existing sources of data, but, where necessary, will use its compulsory information gathering powers to obtain crucial information from retailers and other market participants. The ACCC will specifically be examining whether any wholesale cost savings are being passed through to customers.
In its July 2018 report on restoring electricity affordability and Australia’s competitive advantage, the ACCC made recommendations that would bring about increased competition and lower supply costs so as to reduce prices significantly for businesses and households. The ACCC has been asked to monitor the effects of policy changes, including those resulting from its July 2018 report recommendations.
A discussion paper for the inquiry, published today, is seeking submissions on three key areas:
- the analytical framework for this role, including our expectations of market outcomes and participant behaviour, and the measures we will use to monitor and analyse prices and behaviour
- how we will monitor the impact of policy developments
- the processes and timing for the collection of information, including what data we will require.
"This new long-term role for the ACCC will ensure pressure remains on all players in the energy supply chain to behave in a competitive way and only pass on those costs that are reasonable. It is also important that they pass on any cost savings to consumers," ACCC Chair Rod Sims said.
"The ACCC will also be monitoring whether the policy changes it recommended are helping to drive low prices to consumers."
"If we find problems in the market that aren’t being fixed by existing policy tools, we will be making recommendations to government on what extra changes are needed," Mr Sims said.
"The ACCC is interested in views on how we are to perform this new function, to ensure that we provide the most useful information to the government and the public while imposing the least information burden necessary on the energy companies."
Responses to the discussion paper will help inform the ACCC’s first report, which will set out the ACCC’s approach to monitoring, as well as expectations for how an effectively competitive market should be functioning and how market participants should be behaving. The ACCC will hand its first report to the Treasurer by 31 March 2019.
Submissions close by 19 December 2018 and can be emailed to [email protected].
The discussion paper and terms of reference are available at Electricity Market Monitoring.
Background
On 20 August 2018, the then treasurer, the Hon Scott Morrison MP, directed the ACCC to hold an inquiry into prices, profits and margins in relation to the supply of electricity in the National Electricity Market.
The ACCC must provide its first report to the Treasurer, the Hon Josh Frydenberg, by 31 March 2019 and a second report by 30 September 2019, with reporting to continue at least every six months until 2025.
