Sparking submissions on electricity pricing
On 31 May 2017 the ACCC released an issues paper concerning its inquiry into the retail supply of electricity and the competitiveness of retail electricity markets in the National Electricity Market (Inquiry). Submissions are due by 30 June 2017. In the budget, the inquiry received $7.9M in funding.
The release of the issues paper follows the federal government’s announcement of the Inquiry on 27 March 2017, as previously blogged about here. The ACCC has set a deadline of 30 June 2017 for comments on the issues paper, and beginning in late July 2017 a number of public forums will be held at which further feedback will be sought. A preliminary report will then be published by 27 September 2017, ahead of the release of the final report on 30 June 2018.
During the course of the Inquiry, the ACCC is likely to use its powers under s 95ZK to compel industry participants to produce certain information which is relevant to the Inquiry.
Content of the issues paper
The issues paper identifies three broad categories of issues on which it is seeking comment. These are:
- prices, costs and profits in the electricity supply chain;
- market structure and nature of competition; and
- customer interaction with the market.
Prices, costs and profits in the electricity supply chain
The ACCC has indicated that it will seek to break down combined wholesale energy and retail cost by looking into the four broad costs contributing to retail electricity prices – energy costs, network costs, environmental scheme costs (such as the renewable energy target) and retailer costs and margins.
Specifically, the ACCC is seeking comment from interested parties on:
- the factors that have been driving the rising costs that electricity retailers have incurred in supplying electricity to customers over time;
- any factors that may impact on the future price of retail electricity services;
- the profits and returns made by electricity retailers; and
- other industries/jurisdictions that the ACCC could look to in making findings or recommendations.
Market structure and nature of competition
This part of the Inquiry relates to the level of competition between retail electricity providers, as well as the likely level of competition in the future.
The ACCC is seeking comment from interested parties on:
- the ways that electricity retailers currently compete;
- the level of competition between electricity retailers in each National Electricity Market (NEM) area and distribution area within each NEM area; and
- any impediments to competition between electricity retailers.
Customer interaction with the market
This issue relates to the ability of customers to make informed choices and to understand offers and choose the serve that best suits their needs. The ACCC has noted that there are more than 4,300 generally available offers for electricity throughout the NEM, making it difficult for customers to make a decision about suitable plans. In addition, the issues paper notes that both the manner in which offers are marketed and retailers’ use of discounts may further complicate matters for customers.
In relation to customer interaction with the market, the ACCC is seeking feedback on:
- any impediments that customers face in choosing a retail electricity service and any differences between customer types and NEM areas; and
- how customers’ ability to make informed choices about electricity can be improved.
Interested parties should prepare their feedback in response to the issues paper and submit it to the ACCC before its 30 June deadline. In addition, suppliers in the electricity market should be aware of the ACCC’s information gathering powers under s 95ZK of the CCA, and should seek legal advice if they receive a notice to produce documents or information to the Inquiry.
Further information on the Inquiry and the ACCC’s issues paper can be found on the ACCC website.