ACCC Retail Electricity Pricing Inquiry: Key Recommendations

Author: Nick McHugh Publication | July 23, 2018

The Australian Competition and Consumer Commission (ACCC) has publicly released its Retail Electricity Pricing Inquiry Final Report, entitled “Restoring electricity affordability and Australia’s competitive advantage”.

The report, which was released on 11 July 2018, recommends comprehensive reforms at all levels of the electricity supply chain to ‘reset’ the National Electricity Market.

To appreciate how things might change for generators, networks, retailers, customers and the hedge market, review our infographic below.

Generators

Networks

Retailers

  • Prevent acquisitions resulting in the control of more than 20 per cent generation capacity in any NEM region. (Recommendation 1)
  • Separate Queensland Government’s generation assets into 3 independent portfolios, each with a mix of generation assets. (Rec. 2)
  • Change the market rules to better prevent market manipulation by preventing generators from bidding in bad faith, fraudulent or misleading ways. (Rec. 3)
  • Networks in Queensland and Tasmania and Essential Energy in NSW to write-down regulatory asset base. Privately-owned networks in NSW use rebates to offset impact of over-investment. Empower the AER to monitor effect of write-downs and rebates. (Rec. 11 and 12)
  • Amend rules to reduce complexity and better deal with asset stranding (including how costs will be shared between users and networks) and reliability requirements, including aligning with customer preferences for affordability. (Rec. 13, 16 and 17)
  • Allow distributors to develop off-grid supply arrangements. (Rec. 23)
  • Counterincumbency by amending customer transfer rules to limit customer clawback opportunity and expedite customer transfers. (Rec. 8 and 9).
  • Further harmonise retailer regulation by having each State (and Territory) fully implement the NECF and minimise derogations. (Rec. 26, 27 and 28)
  • In non-price regulated jurisdictions replace standing offer with default pricing, set by the AER. (Rec. 30)
  • Retailers to advertise non-conditional discounts off the AER-set default price. Any further conditional discounts to correlate with actual retailer savings. (Rec. 32, 33 & 34)
  • Empower AER to price monitor & report more extensively. (Rec. 40)
  • Introduce mandatory assignment of cost-reflective network pricing on retailers to boost efficiency and fairness; and support take-up of smart meters. (Rec. 14 and 15).
ACCC recommendations

Sustainability

Hedge Markets

Customers

  • NEG is consistent with competition and affordability imperative. (Rec. 5)
  • Remove or substantially reduce Federal and State feed-in/incentive schemes for small-scale renewable generation. (Rec. 24 & 25).
  • Implement program for cheap Federal Government PPAs for later years of new generation projects, to allow developers to finance new generation projects. (Rec. 4).
  • Require aggregated reporting of over-the-counter hedge trades that are anonymised and published, to improve market transparency and permit a more even playing field for smaller players to access cost-effective hedging. (Rec. 6).
  • Introduce market making obligations to boost hedge market activity in South Australia. (Rec. 7).
  • Implement a mandatory code of conduct for Intermediaries / comparators to ensure customers are provided with real comparisons of offers and provide support government-funded comparison websites. (Rec. 34, 35 & 36)
  • Additional funding and measures to support vulnerable and hardship consumers and small businesses. (Rec. 38, 39, 51 & 52)


Contacts

Nick McHugh

Nick McHugh

Sydney