An inquiry into retail electricity pricing will "immediately commence" by the Australian Competition and Consumer Commission (ACCC) at the direction of the federal government.
The review will scrutinise the behaviour of electricity retailers and
examine why competition hasn't resulted in lower prices, says Prime
Minister Malcolm Turnbull.
"Competition in retail electricity markets should mean lower prices for
residential and business consumers. However, retail electricity markets
don't appear to be operating as effectively as they could," says the Prime
Of specific interest to the ACCC is whether the profit margins of
electricity retailers is in line with their costs and risks, says Rod Sims,
chair of the ACCC.
"Electricity prices have nearly doubled on top of inflation in most parts
of Australia over the last decade based on a variety of different factors.
It will be important to understand and examine these different factors in
each state and territory.
"The ACCC is also keen to look at the structure of the retail industry, the
nature of competition, the representation of prices to consumers and other
factors influencing the price paid by Australians for electricity."
The competition watchdog will work with energy agencies including the
Australian Energy Regulator and the Australian Energy Markets Commission,
using "compulsory information gathering powers", and will also conduct
private and public hearings.
Claims the retail electricity market lacked competition were rejected by
Matthew Warren, the chief executive of the Australian Energy Council.
"We don't need an Inquiry to tell the Federal Government why electricity
prices are increasing. They are increasing because we are running out of
electricity. We are running out of electricity because for the past decade
we haven't had clear, consistent national energy and climate policy.
"Focusing on the operation of the retail electricity market won't improve
energy security nor will it bring down the rising cost of electricity."
Authority to conduct an inquiry into the electricity industry is granted
under Part VIIA of the Competition and Consumer Act (2010).
A preliminary report is expected to be produced by the ACCC by the end of
September 2017, with a final report due on 30 June 2018.