Immediate inquiry launched into retail electricity pricing

Electricity retailers will comply, albeit begrudgingly.

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 Minister.

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.

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