Regulator will scrutinise the behaviour of electricity retailers, and contracts offered to customers, and report back in June 2018

This article is more than 3 years old

This article is more than 3 years old

The Turnbull government has asked the competition regulator to review the national electricity market.

The Australian Competition and Consumer Commission (ACCC) will scrutinise the behaviour of electricity retailers, and the contracts offered to residential and business customers, to ensure Australians are benefiting from competition.



The prime minister, Malcolm Turnbull, and treasurer, Scott Morrison, announced the inquiry on Monday. The ACCC will deliver an interim report in six months, and a full report by 30 June 2018.

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The past few months have been dominated by increasingly toxic debate about the causes of recent power failures across the country, especially in South Australia.

The Hazelwood coal-fired power plant in Victoria’s Latrobe Valley is preparing to close this week, removing 1,600 megawatts from the national energy market.

The Australian Energy Market Operator has said once Hazelwood closes, electricity demand will only continue to be met if there is a market response to fill the gap.

Last week Tony Abbott said the government should be doing all it could to keep Hazelwood open to avoid power shortages.

“If we are serious about tackling Australia’s looming energy crisis, the last thing we should be doing is closing 20%-plus of Victoria’s (and 5% of Australia’s) base load power supply,” he wrote in the Herald Sun.

Turnbull said recent work by the Australian Energy Market Commission, Energy Consumers Australia and the Grattan Institute had highlighted “significant concern” about the causes of recent electricity price increases on Australia’s east coast.

He said the government was determined to maintain Australia’s energy security and to ensure households get a “better deal” for their energy.

The terms of reference for the ACCC inquiry will direct the regulator to consider:

The key cost drivers of retail electricity pricing;



The existence and extent of any entry barriers in retail markets;



The impact of vertical integration;



Whether there is any behaviour preventing or limiting competition or consumer choice;



The profitability of electricity retailers and whether these profits are commensurate with the risk retailers face;



All wholesale market price, cost and conduct issues relevant to the inquiry.



Once the ACCC has finished its review, the government says it will consider what further action should be taken by policy makers and regulators to ensure markets are competitive and energy consumers can have confidence in the reliability, security, pricing and terms and conditions of supply.

“Competition in retail electricity markets should mean lower prices for residential and business consumers,” Turnbull said on Monday.



“However, retail electricity markets don’t appear to be operating as effectively as they could.

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“A better deal in electricity is vital to keeping the lights on, delivering cheaper prices to families and businesses and sustaining jobs, particularly the thousands of jobs in our energy intensive industries.”

He said the ACCC’s review was part of the government’s broader strategy to maintain energy security and affordability, building on other measures such as investment in new energy storage infrastructure, securing domestic gas supplies, reining in gas transportation and electricity network costs, and initiating the independent review into the reliability and stability of the National Electricity Market being chaired by Australia’s chief scientist, Dr Alan Finkel AO.