The ACCC has released draft guidelines setting out guidance on how electricity retailers and generators should comply with three new laws which are designed to reduce the price of electricity for consumers.
The draft guidelines, which were released for consultation today, provide examples and information about the new laws, which were introduced by the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Act 2019, and come into effect on 10 June 2020.
The three new laws restrict electricity retailers from keeping consumer and small business prices unnecessarily high, and stop generators from inflating wholesale prices or blocking access to critical contracts. These actions can have flow-on effects to the prices consumers and businesses pay.
The ACCC’s role is to enforce compliance with these laws. Competition and consumer issues relating to electricity are a key compliance and enforcement priority for the ACCC in 2020.
“The ACCC will seek to ensure electricity companies set fair prices for customers and do not abuse their market position,” ACCC Chair Rod Sims said.
“Retail electricity prices have already come down under reforms introduced last year, and these guidelines are designed to help power companies understand how to fully comply with the new laws, for the benefit of consumers.”
The ACCC will continue to closely monitor the behaviour of companies in the electricity markets, and has a range of enforcement tools available ranging from public warning notices and infringement notices to commencing legal proceedings in the Federal Court alleging that companies have breached these laws.
“These new laws will enable us to take electricity companies to court if we have evidence that they are engaging in prohibited conduct in breach of these new provisions,” Mr Sims said.
The new laws prohibit the following conduct:
- the ‘retail pricing prohibition’ prohibits electricity retailers from charging small customers prices which are not adjusted to reflect sustained and substantial cost reductions in their underlying costs;
- the ‘electricity financial contract liquidity prohibition’ prohibits generators from restricting access to electricity hedging contracts for an anti-competitive purpose;
- the ‘electricity spot market prohibitions’ prohibit bidding practices by generators which are engaged in fraudulently, dishonestly or in bad faith and/or for the purpose of distorting or manipulating prices in an electricity spot market.
The ACCC invites interested parties to make submissions on the draft guidelines by 3 April 2020 via the ACCC Consultation Hub.
The ACCC will release its final guidelines before these new laws come into effect on 10 June 2020.
In July 2018, the ACCC released the final report for its inquiry into the supply of retail electricity and the competitiveness of retail electricity prices.
On 20 August 2018, the Treasurer directed the ACCC to hold a public inquiry into the prices, profits and margins in the supply of electricity in the National Electricity Market. The ACCC monitors and reports on these issues at least every six months.
On 25 November 2019, Parliament passed the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Act 2019, which introduces new prohibitions into the Competition and Consumer Act 2010 as a new Part XICA. These provisions come into effect on 10 June 2020.
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