The Australian Energy Market Commission (AEMC) today published the Second Final Report on its review of competition in South Australian electricity and gas retail markets, recommending that price regulation should end no later than December 2010 for electricity and June 2011 for gas.
The report concludes that the existing framework for regulating energy retail prices should be replaced by a transparent price monitoring and reporting framework.
The report has been presented to the South Australian Government and the Ministerial Council on Energy for consideration.
AEMC Chairman, Dr Tamblyn, said the report completed the AEMC’s review of retail energy competition in South Australia.
“In response to the changing economic and market conditions in South Australia, we have recommended a flexible and efficient approach to keep prices in line with costs which is combined with a prudent and transparent oversight of market pricing performance,” Dr Tamblyn said.
“The recommended price monitoring regime represents an effective balance between maintaining the viability of energy retailing in South Australia into the future, and providing appropriate oversight of the retail energy market for consumers.
“The recommended price monitoring and reporting framework should be introduced for a period of at least three years following the removal of retail price regulation. Within that period, the AEMC should review the efficacy of the framework and its ongoing need,” Dr Tamblyn said.
Under the proposed framework:
- All retailers set and amend their own standing contract and default contract prices.
- All retailers must meet a range of publication requirements for changes to their standing contract prices.
- The Essential Services Commission of South Australia (ESCOSA) would monitor trends in standing, default and market contract prices in the competitive market, including the estimated annual customer bill for each standing contract and trends in the estimated savings available under market contracts relative to standing contracts.
- This information would form the basis of price monitoring reports that ESCOSA would publish every 6 months in addition to its existing market monitoring and reporting functions. This additional price monitoring role would be supported by the continuation of ESCOSA’s current energy market monitoring and reporting functions.
- ESCOSA would conduct additional oversight of retail gas prices in regional areas.
- The South Australian Government would retain a conditional reserve pricing power, enabling it to re-introduce regulations if the level of competition deteriorates.
- The existing non-price consumer protection framework would continue.
For further information contact:
AEMC Chairman, Dr John Tamblyn 02 8296 7800 or
AEMC Communications Manager, Prue Anderson 02 8296 7800 or 0404 821 935