The Australian Energy Market Commission (AEMC) today published the Draft Report of its Review of the Effectiveness of Competition in the Electricity and Gas Retail Markets in South Australia – finding that retail competition for both electricity and gas is effective.

AEMC Chairman, Dr John Tamblyn, said the AEMC’s preliminary finding that competition is effective for small electricity and natural gas customers in South Australia will now be open for a period of public consultation and comment. Submissions should be lodged by 13 August 2008.

“The majority of small energy customers in South Australia know about energy retail competition and are participating actively in the energy market,” Dr Tamblyn said.

“This is particularly evident from the high rate at which customers are switching to energy market contracts. More than 80% of residential energy customers are aware of retail competition and more than 60% have switched to market contracts,” he said.

“There is also evidence of strong rivalry between energy retailers as they compete to gain and retain market share by offering customers the choice of alternative prices and services.”

Dr Tamblyn noted that market entry and expansion by new energy retailers in South Australia has strengthened competition and customer choice in the energy retail market.

“New entrant retailers have continued to win market share from the two established South Australian retailers and now account for more than 40% of small customers in both the electricity and gas markets”.

The AEMC’s draft report has recognised there is now a likelihood of increasing energy costs and prices in future associated with an emerging need for new generation investment and any prospective policies to address climate change risks.

Commenting on these potential developments, Dr Tamblyn said, “The competitive energy retail market should be able to accommodate such changes in real energy costs, provided retail prices are able to adjust in response, allowing competitive retail margins to be maintained.”

The AEMC now seeks detailed submissions on all aspects of the draft report’s preliminary findings in relation to the state of energy retail competition in South Australia. Stakeholders and interested parties will be invited to attend a public forum in Adelaide on 17 July 2008 at which the AEMC will present the preliminary findings detailed in its Draft Report.

Following these community consultations the AEMC will provide its Final Report on the state of energy retail competition in South Australia in September 2008 to the South Australian Government and the Ministerial Council on Energy (MCE).

If the AEMC’s final assessment is consistent with the findings of its First Draft Report , the AEMC is then required to provide advice to the South Australian Government and MCE on options for modifying or removing the current retail energy price regulation arrangements in South Australia.

For information contact
AEMC Chairman John Tamblyn 02 8296 7800
AEMC Communication, Prue Anderson 02 8296 7800 or 0404 821 935