Notice of Inquiry into the National Energy Market
On 20 August 2018 the then Treasurer, the Hon Scott Morrison MP, directed the ACCC to hold a public inquiry that will monitor the prices, profits and margins in the supply of electricity in the National Energy Market. The inquiry is pursuant to subsection 95H(1) of the Competition and Consumer Act 2010.
Matters to be monitored and taken into consideration in the inquiry include but are not limited to:
I. electricity prices faced by customers in the National Energy Market including both the level and the spread of price offers, analysing how wholesale prices are influencing retail prices and whether any wholesale cost savings are being passed through to retail customers
II. wholesale market prices including the contributing factors to these such as input costs, bidding behaviour and any other relevant factors
III. the profits being made by electricity generators and retailers and the factors that have contributed to these
IV. contract market liquidity, including assessing whether vertically integrated electricity suppliers are restricting competition and new entry, and
V. the effect of policy changes resulting from recommendations made by the ACCC in its Retail Electricity Pricing Inquiry report of July 2018.
Where appropriate, the inquiry will make recommendations to government(s) to take any proportional and targeted action considered necessary to remedy any failure by market participant(s) (or the market as a whole) to deliver competitive and efficient electricity prices for customers.
Conduct of the Inquiry
The inquiry commenced on 20 August 2018.
The inquiry will provide its first report by 31 March 2019 and at least every six months thereafter until the conclusion of the inquiry on 31 August 2025.
Further information about the Inquiry can be found on the ACCC’s website
https://www.accc.gov.au/regulated-infrastructure/energy/electricity-market-monitoring-2018-2025.
Overview
The Competition and Consumer Act 2010 was enacted to address the need for regulation and oversight in the Australian market, ensuring fair competition and protecting consumers. One of its provisions, subsection 95H(1), empowers the Australian Competition and Consumer Commission (ACCC) to hold public inquiries into specific market areas where there is concern about anti-competitive practices or inefficient market outcomes. In August 2018, the Treasurer directed the ACCC to conduct a public inquiry into the National Energy Market, focusing on electricity prices, profits, and margins. This inquiry aims to monitor and analyse factors influencing the electricity market, including wholesale and retail prices, the profitability of electricity generators and retailers, and the impact of policy changes. The policy objective of this inquiry is to provide recommendations to the government for any necessary actions to ensure competitive and efficient electricity prices for consumers.
Scope and Application
The Australian Competition and Consumer Commission (ACCC) was directed by the Hon Scott Morrison MP, then Treasurer, to conduct a public inquiry into the National Energy Market, pursuant to subsection 95H(1) of the Competition and Consumer Act 2010. The inquiry, which commenced on 20 August 2018, will oversee various aspects of the electricity supply market including prices, profits, margins, and the influence of policy changes. The scope of the inquiry encompasses monitoring electricity prices and their spread, wholesale market prices and contributing factors, profits of electricity generators and retailers, market liquidity, and the impact of policy changes. The ACCC will report its findings by 31 March 2019 and at least every six months thereafter until the conclusion of the inquiry on 31 August 2025, with the potential to recommend government action to address market failures. The inquiry applies to entities within the National Energy Market, including electricity generators and retailers, and operates on a national level across Australia. The ACCC has the authority to extend or restrict the application of the inquiry through subordinate instruments, ensuring the comprehensive examination of market conduct and conditions.
Key Provisions
The key operative sections of the legislation, specifically subsection 95H(1) of the Competition and Consumer Act 2010, mandate the Australian Competition and Consumer Commission (ACCC) to undertake a public inquiry into the electricity prices, profits, and margins within the National Energy Market. The Treasurer directed the ACCC to monitor various aspects of the electricity market, including the prices faced by customers (subsection I), the wholesale market prices and contributing factors (subsection II), the profits of electricity generators and retailers (subsection III), the liquidity of contract markets (subsection IV), and the effects of policy changes from previous ACCC inquiries (subsection V). The inquiry is set to provide reports to the government at least every six months starting from 21 August 2018 and ending on 31 August 2025.
The Act imposes several obligations on the ACCC regarding the conduct of this inquiry. The ACCC must diligently monitor and analyse the various factors influencing electricity prices, profits, and market conditions. This includes examining the relationship between wholesale and retail prices, assessing the impact of input costs and bidding behaviour on wholesale prices, and evaluating the profits of market participants. Additionally, the ACCC is tasked with investigating the liquidity of contract markets and the potential anti-competitive practices by vertically integrated suppliers. The ACCC is also required to assess the effects of policy changes resulting from previous inquiries and to make recommendations to the government for any necessary action to ensure competitive and efficient electricity prices.
Breaching the obligations set out in the Act may have legal consequences. While the specific offences and penalties are not detailed in the provided text, it is reasonable to infer that any failure by the ACCC to comply with the mandates of the inquiry could lead to legal scrutiny or consequences. The Act empowers the ACCC to recommend actions to the government, which could include regulatory changes or other interventions to correct market failures. The exact nature of any penalties or consequences for non-compliance would typically be detailed in the specific provisions of the Competition and Consumer Act 2010, which are not fully referenced here.