ACCC report recommends overhaul of energy market
HOUSEHOLDS could see a “significant” drop in power prices before the end of the year if the recommendations of a major consumer watchdog report are implemented quickly.
HOUSEHOLDS could see a “significant” drop in power prices before the end of the year if the recommendations of a major consumer watchdog report into the energy market are implemented quickly.
The ACCC report, out today, predicts Australians could save more than $400 a year on power bills under a radical overhaul of the national energy market it is proposing.
ACCC chair Rod Sims said there could be “significant reductions in power prices as soon as the end of this year” if governments implemented the changes.
He estimated the full power price cuts would occur by July 2019 but hoped there would be reductions before then.
The ACCC has made 56 recommendations, including that retailers shouldn’t use special conditions like pay on time discounts to actually impose harsh late penalties.
It also recommends that the Australian Energy Regulator set a benchmark price so that consumers could compare discounts and that a cap be placed on any further merger or acquisition of a company with more than 20 per cent market share of generation, excluding companies building new generation.
It also recommends governments effectively underwrite the construction of new dispatchable power sources by guaranteeing long-term contracts for large industrial and commercial users.
“I’m confident that the changes will be made,” Mr Sims said.
He said policy errors had been made by governments over more than a decade, perhaps because they did not realise the consequences and full costs of what they were implementing.
“Most of the mistakes we’ve had from governments were ones that with hindsight they wouldn’t repeat again,” he said.
“And I’m hopeful that with our recommendations laid out they’ll take the necessary steps to fix up those problems and make sure Australians have affordable electricity.”
Prime Minister Malcolm Turnbull welcomed the ACCC’s report and promised to consider the recommendations.
“Australians are crying out for an energy policy that is focused on them,” Mr Turnbull told an event in Queensland.
“They want politicians to co-operate, to deliver an energy policy that is focused on them, and what that means is it’s focused on them paying less for energy.”
The prime minister said the starting point was a competitive, consumer-focused market.
He said too many energy generators and retailers had ripped off Australian customers.
“Some in the sector took advantage of the strong positions, using the cover of uncertainty to take advantage of consumers,” Mr Turnbull said.
Mr Turnbull said the ACCC backed the coalition’s national energy guarantee policy, which is aimed at bringing down prices while guaranteeing reliability and cutting emissions.
Some coalition MPs are arguing the ACCC’s report means the government should fund investment in coal, but Mr Turnbull said it was technology-neutral.
“The national energy guarantee is designed to make sure that we have a sufficient amount of reliable power,” he said.
He also dismissed growing calls for a royal commission into electricity prices, saying the ACCC inquiry had been able to examiner the retailers’ books.
More than two million small and medium businesses could save an average of 24 per cent on their bills under the ACCC’s recommendations.
Commercial and industrial customers could see electricity costs drop by 26 per cent.
Energy Minister Josh Frydenberg said the Turnbull government would carefully consider the report’s recommendations in consultation with state and territory governments.
“There is good news for consumers out of these recommendations, which the ACCC has said will reset the market and drive power prices lower,” Mr Frydenberg told Sky News.
Labor energy spokesman Mark Butler said power prices had skyrocketed under Malcolm Turnbull, arguing divisions within the coalition had led to uncertainty.
“The ACCC report is the culmination of Malcolm Turnbull’s failures to produce an energy policy that his party room will allow him to tick off on,” he said.
The ACCC inquiry was commissioned in March 2017 by Treasurer Scott Morrison.