The Australian Competition and Consumer Commission (ACCC) is probing potential price gouging and anti-competitive conduct as power prices are trading five times higher at present than they were a year ago.
The ACCC has released its latest Electricity Markets Inquiry report, which shows electricity price rises have been significant and unprecedented in recent weeks.
During the first two weeks of June, wholesale electricity spot prices rose significantly, according to the ACCC. Volume weighted average spot prices ranged from $341/MWh to $590/MWh depending on region, roughly 5 times higher than in quarter 1 2022.
Base futures contracts also became significantly more expensive, reflecting market expectations of a sustained period of high wholesale prices.
“There is no doubt that international factors such as the war in Ukraine have heavily impacted the global gas supply and prices. A cold start to winter and a reliance on ageing coal-fired power stations amplified challenges already facing the Australian energy market,” ACCC chair Gina Cass-Gottlieb said.
“We are acutely aware of the pressures that rapidly rising energy prices are placing on Australian households and businesses. We are working closely with our colleagues at the Australian Energy Regulator to monitor the market and to take action against conduct harming competition or consumers and to preserve the competitiveness of our energy markets.”
Ms Cass-Gottlieb said under direction from the Federal Government, the ACCC will use its full information gathering powers to provide greater transparency around the factors influencing electricity and gas prices, including profits and margins from a wide range of energy companies.
“In line with the Treasurer’s request, we will also assess and bring to the government’s attention any need for regulatory change to ensure electricity and gas markets function properly for the benefit of all Australian consumers,” she said.
“In addition, the Federal Energy Minister with State and Territory Energy Ministers have requested the ACCC, as part of its ongoing inquiries on the national energy market, to report back in July 2022."
The ACCC said it is actively monitoring retailer offers to supply electricity and can take energy retailers to court if they mislead consumers.
Working jointly with the Australian Energy Regulator (AER), Ms Cass-Gottlieb said the ACCC had written to energy retailers to remind them of their obligations in relation to electricity prices under the Competition and Consumer Act and the National Electricity Retail Code.
“Retailers cannot set the price of their standing offers above the ‘safety net’ Default Market Offer set by the AER, or (in Victoria) the Victorian Default Offer set by the Essential Services Commission,” Ms Cass-Gottlieb said.
“The ACCC also enforces legislation aimed at preventing anti-competitive conduct in the electricity market. Part XICA of the Competition and Consumer Act (the Prohibiting Energy Market Misconduct laws) bans generators from manipulating the spot market, for example by withholding supply to inflate prices.”
“It also penalises generators that withhold electricity contracts for the purpose of substantially lessening market competition. We will be closely watching market behaviour in coming months to ensure these rules are not being broken.
The ACCC said many Australians were also worried about the prospect of higher energy bills. In some cases, retailers had contacted customers advising that their prices would go up and suggesting that they switch providers.
“The market is changing rapidly so keep up to date about your plan and the prices you’re paying,” Ms Cass-Gottlieb said.
“It may also be harder to find another plan at the moment, as some retailers are not accepting new customers. Nevertheless, it is important to ensure that customers shop around to ensure they are on the best deal available to them.”