Electricity: ACCC to look at network prices and poor selling practices

Rod Sims ACCC Chair

As part of a “Future Directions’ speech the incoming Chair of the Australian Competition and Consumer Commission, Rod Sims, outlined the ACCC’s approach to electricity prices as part of a discussion about how the various tools available to the ACCC will be coordinated. He noted that the Australian Energy Regulator [AER] is looking closely at the rules that apply to setting distribution prices, and that the agency will also work on consumer education, responses to poor selling practices and monitor wholesale market for evidence of manipulation.

“Current consumer concern over cost of living pressures has much to do with utility prices. This is an area where the ACCC can assist consumers by utilising its tools and taking a whole?of?ACCC approach. Electricity is a good example of this. The combined forces of the ACCC and the Australian Energy Regulator will tackle this issue on a range of fronts.

“The AER regulates the revenues of the network companies – the poles and wires ? which make up around half the bill of a typical household. These network prices have risen significantly over the past four years. The AER has identified that the rules framework under which it works has been contributing to the increases, and will soon be putting forward vital rule changes seeking to address the imbalance in the regulatory regime between efficient investment incentives and fair charges for consumers.

Ensuring that consumers can effectively participate by making informed choices is a crucial component of a competitive electricity market. The AER/ ACCC will interact seamlessly in developing strategies to educate consumers about their choices, including development of the AER’s national energy price comparator website.

The ACCC will do more to ensure that energy businesses play their part. The market is not truly competitive where there is bad sales behaviour, or where confused consumers don’t understand price structures and are switching retailers against their interests. This will be an important ACCC enforcement focus in future, as I have already stated.

The ACCC and the AER will also work closely together to ensure the effective application of the ACL and the coming electricity consumer laws. There is considerable potential for confusion if this is not handled well.

The wholesale price of electricity makes up 40 per cent of household bills. The AER and ACCC will be active in monitoring the wholesale spot market for illegal bidding and market manipulation.
Having an industry specific regulator, like the AER, as part of the ACCC, allows a holistic strategy to be developed and delivered in the interests of consumers.

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