ACCC releases blueprint to reduce electricity prices

The Australian Competition and Consumer Commission (ACCC) has made a series of recommendations in a recent report, which the ACCC believes could help manufacturing industries save up to 26 per cent on their electricity bills.

The final Retail Electricity Pricing Inquiry report, released by the ACCC earlier this week,  includes a set of 56 recommendations, detailing ways to fix the National Electricity Market.

These recommendations include such measures as replacing the current retail offers (which are not the same between retailers) with a new consistent offer set at a price determined by the Australian Energy Regulator;  requiring retailers to reference any discounts to the new ‘default’ offer pricing to make it easier for consumers to genuinely compare offers; and introducing a mandatory code for comparator websites so that offers are recommended based on customer benefit, not commissions paid.

“The National Electricity Market is largely broken and needs to be reset. Previous approaches to policy, regulatory design and competition in this sector over at least the past decade have resulted in a serious electricity affordability problem for consumers and businesses,” ACCC Chair Rod Sims said.

The ACCC estimates its recommendations, if adopted, could result in electricity cost savings of between 20 and 25 per cent for the average household and an average of 24 per cent on the electricity bill for small and medium businesses.

“Many small to medium businesses operate on very small margins, and cannot afford the increases to their costs that have occurred over past years,” Sims said.

Commercial and industrial customers, the heaviest users, could see electricity costs decrease on average by 26 per cent.

“Commercial and industrial customers, like mining and manufacturing companies, have watched what has been a relative competitive advantage to them, affordable electricity, now threatening their viability,” Sims said.

The Retail Electricity Pricing Inquiry had commenced on 27 March 2017, after the Treasurer issued a notice requiring the ACCC to hold a public inquiry into the supply of retail electricity and the competitiveness of retail electricity prices in the National Electricity Market (NEM).

As part of the inquiry the ACCC issued over 100 notices to retailers and generators which compelled them to provide documents, information and data. Retailers were required to provide information about their revenue and usage, wholesale costs, network costs , environmental scheme costs, and retail costs and margins.