The current period of structural upheaval in Australia’s energy sector provides an opportunity for more affordable energy and it should not be wasted, ACCC Chair Rod Sims said today.
In relation to electricity, Mr Sims noted that the focus on reliability and sustainability need not, and therefore should not, come at the expense of affordability.
“We must make sure that consumers and businesses are not wearing increased costs as a result of them being required by governments to take on risk which sits better with private investors,” Mr Sims said.
Speaking at the Energy Users Association of Australia (EUAA) online seminar series, Mr Sims said that while recent reductions in wholesale electricity prices have been of benefit, there is still much work to be done to ensure electricity retailers are passing on the large cost savings to all Australians.
The long-term supply factors of increasing renewable generation and falling fuel costs have been the main reasons for lower wholesale prices since mid-last year.
“If retailers are not passing on these large wholesale price reductions to consumers, they will need to explain why,” Mr Sims said.
“The Prohibiting Energy Market Misconduct (PEMM) laws came into effect in June last year and allow the ACCC to take action where retailers have not reduced their prices in line with reductions in wholesale costs. And we will take action.”
Mr Sims also said the ACCC’s most recent gas report showed that LNG exporters and other gas suppliers also have the opportunity and capacity to offer cheaper gas to the domestic market, and could do more.
“The development of a voluntary Gas Code as requested by the Government provides an opportunity for industry to collectively develop a new set of rules that addresses poor selling practices and facilitates competitive outcomes,” Mr Sims said.
“The government said it wanted to see a substantially progressed gas code by February this year and it is unacceptable that as at 25 March, users had not even seen the code.”
Export parity prices are also an important factor influencing domestic gas prices and affordability in the east coast gas market.
In October 2018, the ACCC started publishing its Liquefied Natural Gas (LNG) netback price series to improve gas price transparency.
“Global LNG markets have since changed, and the factors that could influence pricing strategies and industry views about the most appropriate international price marker have also changed,” Mr Sims said.
The ACCC published an issues paper on the LNG netback price series last week and invites submissions.
“We welcome feedback on a range of issues to do with the LNG netback price series and we believe it’s important to get this right and debate the issues publically and transparently,” Mr Sims said.
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