ACCC: no smoking gun on deregulated energy markets

An interim report by the Australian Competition and Consumers Commission (ACCC) has found that deregulation of Australia’s retail electricity markets is not the main driver of higher bills, the energy industry said today.

The detailed review by the ACCC found a range of factors have contributed to steeply rising power bills over the past decade, and in the last year particularly as a result of marked increases in wholesale prices.

Australian Energy Council Chief Executive, Matthew Warren, said that the report did not reveal electricity retailers were making inflated margins as has been recently claimed.

“The ACCC report found that competitive pressures between electricity retailers have not yet reduced operating costs, but their net margins have remained flat.  Retail margins have actually fallen in Victoria as a share of residential bills since 2007-08,” Mr Warren said.

“The answer still lies in making competitive retail electricity markets work better for customers.”

Mr Warren said the data in the interim report highlighted that a key to this is sustained new investment in generation to address the worsening supply-demand imbalance in Australia’s electricity supply.

“For a decade now we have not managed the growing carbon risk that is impacting investment in new generation in Australia,” Mr Warren said, “until we do, the electricity prices are likely to increase and reliability will deteriorate.

“We still need a durable, effective national climate and energy strategy.  Not talking about climate change doesn’t make the problem go away, it just makes it worse.”

About the Australian Energy Council

The Council represents 21 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.