All National Electricity Market governments should focus on the framework questions surrounding the national electricity market and not become involved in the day-to-day operation of the market, Acting Australian Competition and Consumer Commission, Chairman, Mr Rod Shogren, told the South Australian Energy Market Briefing in Adelaide today.
In welcoming the NEM Ministers Forum looking at the issue of market governance, Mr Shogren noted that the national electricity market framework "must delineate the role of governments and limit it to the broader policy issues and leave the operation of the market to market participants. Anything short of this would send a negative signal to investors in the market".
Mr Shogren commented that the current difficulties over network pricing and the integration of networks with the energy market illustrated the problem.
"I believe the governance arrangements of the NEM have failed to quickly resolve the issues regarding the integration of energy markets with network services, largely because of the political nature of the issue.
"This shortcoming of the current governance arrangements has become more pronounced over the last year as the code change process has been placed under pressure by NEM governments. In such a climate, it is difficult for NEM institutions to resolve outstanding issues. Nor is the ACCC able to give the guidance that we believe is needed.
"Let us all do our best to see that the efforts of governments are directed towards market-based outcomes, that time isn't wasted reinventing wheels and throwing open reasonably settled issues, and that interstate rivalries and jealousies do not override the national interest".
Commenting on South Australia's experience, Mr Shogren observed that, while the electricity market reforms have delivered significant benefits, he accepted that South Australians "cannot be expected to be happy with paying the highest average prices in the NEM".
"We need to understand why prices are higher in South Australia".
While the investment picture for South Australia's electricity industry looks good for the medium term, Mr Shogren noted that short-term difficulties will remain.
"We are being asked to look at capping the market, or restricting the ability to modify bids or even regulating delivered energy prices in the local market. However, I don't see how you can intervene in the market in such a critical fashion without damaging the prospects for investment in SA over the medium term".