Today I am releasing the preliminary report of the Australian Competition and Consumer Commission’s (ACCC) inquiry into retail electricity prices that I commissioned on March 27 this year.
The report outlines the drivers of increased electricity costs for Australian businesses and households and provides insight into how further downward pressure can be placed on rising electricity prices. The information obtained from the inquiry has been a key input to the Government’s ongoing policy development process.
The report indicates that aspects of the operation of the National Electricity Market are affecting the affordability of electricity for households and businesses.
The ACCC found that the main driver of cost increases was network costs, including regulatory requirements, financing costs and revenue determination processes. Other key factors identified were insufficient competition in generation and electricity retail markets, recent closures of coal-fired power stations and the cost of environmental schemes. Together, these elements have contributed to an almost 44 per cent rise in the average annual residential customer bill from $1,177 to $1,691 between 2007-08 and 2016-17.
The report also states that the repeal of the carbon price on 1 July 2014 had the effect of lowering wholesale costs. The Government notes the abolition of the Carbon Tax saw the largest fall in electricity prices on record.
The ACCC also noted that complexity in the market is making it difficult for Australians to shop around for better deals and compare electricity pricing offers.
The report made a number of recommendations the Government will now consider, including that the costs of any future environmental schemes needed to be in proportion to the benefit they were trying to achieve.
The ACCC noted there is no ‘silver bullet’ to ease pressure on prices but endorsed actions already taken by the Turnbull Government including our commitment to removing the Limited Merits Review process and the agreement secured from electricity retailers to move consumers off high standing offers or expired benefit offers, which the ACCC will continually monitor.
Further work will now be undertaken by the ACCC prior to the release of a final report by the middle of next year aimed at making further recommendations to improve electricity affordability across the National Electricity Market.
The final report will help to further drive action from the Turnbull Government in order to secure more affordable and reliable energy for Australian households and businesses.
Ensuring we keep the lights on and that the prices Australian families pay for energy are affordable is central to the Turnbull Government’s approach to energy policy. We are working to ensure that Australians are getting the best deal from energy retailers.
A copy of the preliminary report is available on the ACCC’s website.