ACCC calls for change to ‘unsustainable’ energy system

A report released today by the Australian Competition and Consumer Commission (ACCC) says increasing prices and a lack of transparency have created an ‘unsustainable’ industry landscape in the country, with consumers and businesses facing a serious electricity affordability problem.

‘Restoring electricity availability and Australia’s competitive advantage’ details the various ways the energy sector is threatened and offers solutions to its growing instability, with energy regulators called upon to tackle market manipulation and work to lower unnecessary costs.

Australian  Labor party climate change spokesman Mark Butler says the report shows the ‘energy crisis’ under the Coalition had caused ‘skyrocketing electricity and gas prices’.

More positively the report says market reform could ‘bring down prices and restore consumer confidence and Australia’s competitive advantage’, with a reinvigorated sector offering the chance for ‘significant gains’ for both consumers and businesses.

The report identifies a lack of competition in the energy sector as the main cause of rising costs. Large companies involved in both electricity generation and retail are specifically criticised as, although they have a large portion of the market, they often charge a large premium on the sale of wholesale electricity to their own retail operations.

This problem was also highlighted in a recent report from public policy think tank Grattan Institute, which found wholesale electricity prices rose across the national electricity market by an average of 130% between 2015 and 2017.

The ACCC has said the government needs to increase its funding in support of long-term contracts for large commercial and industrial users, with the hope that this would bring about a new dispatchable generation from industry members currently lacking a large market share.

Legal changes to boost competition between electricity wholesalers and retailers were also suggested, a move which the ACCC says could help consumers save hundreds of dollars each year on energy bills. For instance, a cap on any further merger or acquisition by a company with more than 20% generation market share has been advised, though building new generation capacity would be allowed.

Also proposed was that the government underwrites dispatchable power, fighting against the current push from some Nationals and Queensland LNP MPs for coal-fired power.

To tackle rising prices, the ACCC has also recommended the Australian Energy Regulator implement a default or benchmark rate for households and small businesses, while third-party comparator websites are told to declare commissions to help consumers compare and take advantage of available deals.

The problem of unclear discounts from comparator websites was also detailed in a separate report by the Australian Energy Market Commission, which said sites offering advice on electricity plans often lack transparency and affect inflating power prices.

source:-.power-technology