Market Review: Completed
Overview
The AEMC completed its first annual retail competition review on 22 August 2014. The review assessed the state of competition in the small customer electricity and natural gas retail markets in all National Electricity Market (NEM) jurisdictions.
The review found that the level of competition ranges from effective in South East Queensland, New South Wales, Victoria, and South Australia, to less effective in the Australian Capital Territory and is yet to emerge in Tasmania and regional Queensland.
The review involved extensive consumer research, stakeholder consultation and the analysis of data from the Australian Energy Regulator, Ombudsmen in each jurisdiction, the Australian Energy Market Operator, regulators and retailers to develop a picture of energy competition in each state.
The final report sets out some common findings across all NEM jurisdictions as well as findings specific to each. It is accompanied by two consultant reports that provide further detail on the retailer and customer research undertaken to inform the review.
This is an annual review process and the AEMC will be consulting publicly on its approach for future competition reviews later this year.
Background
Retail competition reviews are conducted in accordance with the framework set out in the Australian Energy Market Agreement (AEMA). These reviews provide advice to governments to support a commitment made by all jurisdictions under the AEMA to remove retail energy price regulation where effective competition can be demonstrated.
Previously the AEMC competition reviews focussed on one jurisdiction at a time, with the AEMC completing reviews of Victoria in 2008, South Australia in 2008, the Australian Capital Territory in 2011 and New South Wales in 2013.
In December 2012, the COAG Energy Council (formerly the Standing Council on Energy and Resources) agreed to revise the approach for AEMC competition reviews to be conducted annually and include all NEM jurisdictions. This was the first review under the revised approach.
Terms of reference and approach paper
The terms of reference was issued by the COAG Energy Council to the AEMC on 13 January 2014 and was published with an approach paper on 17 January 2014.
This is a standing terms of reference that applies to each annual competition review. It requires the AEMC to publicly release a final report by 30 June each year. Due to the delay in receiving the terms of reference, the AEMC requested that the COAG Energy Council provide an extension in timing that would apply to this year’s review only. Consequently the date for publishing the final report was extended to 1 September 2014. The final report was published slightly earlier, on 22 August 2014.
Consultation
To inform our analysis, the AEMC sought stakeholder submissions. We received 18 submissions which are available to view below.
The AEMC also met with key stakeholders to discuss the review and seek their input. This included consumer groups, retailers, Ombudsmen, regulators and jurisdictional governments.