Wednesday, 21 November 2018 11:50

Electricity prices under scrutiny by competition watchdog Featured

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Electricity prices under scrutiny by competition watchdog Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Australia’s competition watchdog, the ACCC, is to undertake a new inquiry into the supply of electricity in the national electricity market, with a focus on the prices consumers — both business and households — are paying for electricity and the underlying factors for any significant price movements.

The Australian Competition and Consumer Commission will report, at least every six months, on information it obtains from energy companies on price movements profits and margins, including the effect of policy changes in the national electricity market.

The inquiry comes as 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.

The ACCC says it 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.

One specific focus will be the examination of 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.

And 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 on Wednesday, is seeking submissions on three key areas:

  • the analytical framework for this role, including expectations of market outcomes and participant behaviour, and the measures used to monitor and analyse prices and  behaviour;
  • how we will monitor the impact of policy developments; and
  • the processes and timing for the collection of information, including what data will be required.

“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.

“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.”

The ACCC says responses to the discussion paper will help inform its first report, which will set out the 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, and submissions to the inquiry close by 19 December.

To view the inquiry terms of reference and details of the discussion paper click here.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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