ACCC puts businesses on notice about Carbon Tax Price Reduction Obligation

17 July 2014

Now that Parliament has repealed the carbon tax, the Australian Competition and Consumer Commission will have new powers to take action against businesses that supply regulated goods which fail to pass through all cost savings attributable to the carbon tax repeal.

Businesses which supply regulated goods – electricity, natural gas, synthetic greenhouse gases (typically refrigerant gases) or synthetic greenhouse gas equipment (such as refrigerators and air-conditioners) will be required to pass through all of the cost savings, direct and indirect, that are attributable to the carbon tax repeal.

“When the new law takes effect and the carbon tax is repealed, these businesses must pass through all cost savings from the carbon tax repeal,” ACCC Chairman Rod Sims said.

“If they fail to do so, the ACCC will take enforcement action against them and seek serious penalties from the courts.”

A supplier of regulated goods that fails to pass through all cost savings attributable to the carbon tax repeal will breach the carbon tax price reduction obligation and may face court imposed penalties of up to $1.1 million per contravention for corporations or $220,000 per contravention for an individual. The court can also issue injunctions or declarations, make compensation orders or orders setting the maximum price of a regulated good or requiring the supplier to pay refunds to consumers.

Suppliers in the key areas of electricity, natural gas or a bulk importer of synthetic greenhouse gas that engage in price exploitation will also be subject to a penalty equal to 250 per cent of the cost savings that were not passed through.

“The ACCC will be keeping a close eye on prices to make sure that all cost savings go to consumers,” Mr Sims said.

Businesses that retail electricity and natural gas, produce electricity and sell into wholesale markets or bulk import synthetic greenhouse gas will be required to provide evidence to the ACCC to show that they have passed on the cost savings.

“These businesses will be required to explain how the carbon tax repeal affected their input costs and how they are passing through the savings. These powers are in addition to the ACCC’s existing investigative powers and will ensure that businesses engaging in price exploitation are identified and enforcement action is taken against them,” Mr Sims said.

“If suppliers of regulated goods put their prices up due to the carbon tax, these prices must similarly come down on repeal,” Mr Sims said.

“If these businesses don’t do that, they will be looking at serious court action from the ACCC and significant monetary penalties.”

The new provisions also enhance the ACCC’s capacity to address any misleading representations about the impact of the repeal.

If a consumer or a business is concerned that one of their suppliers is engaging in price exploitation, they should contact the supplier to obtain information on the effect of the carbon tax repeal on the supplier’s prices. If they remain concerned, they can contact the ACCC. Information about price exploitation for suppliers of regulated goods, other businesses and consumers will be published on the ACCC website.

The ACCC will make further public comment early next week.

Release number: 
NR 182/14
Media enquiries: 
Media team - 1300 138 917

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