Australia’s consumer watchdog says it is prepared to take action against energy market participants “distorting or manipulating” prices, as households and small businesses feel the brunt of extreme cost increases.
Australian Competition and Consumer Commission (ACCC) chair Gina Cass-Gottlieb has confirmed it will act on requests from Treasurer Jim Chalmers and other state and territory ministers to investigate the energy market.
“Under direction from the federal government, we will use our 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,” Cass-Gottlieb said.
The ACCC will also recommend to the federal government if regulatory changes are needed, she added.
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In addition, the ACCC published its latest report on the National Energy Market (NEM) on Monday, covering the state of play in Victoria, New South Wales, South Australia, and southeast Queensland up to Q3 2021.
However, in response to rampant price increases through 2022, the ACCC also published a special addendum reflecting on today’s market conditions.
“Electricity spot prices across the NEM have been elevated in 2022, with particularly extreme price outcomes in May and June,” the ACCC said.
The volume weighted average spot price for electricity across the NEM ranged from $341 to $590/MWh from May 31 to June 13, the report found.
Those prices are up to 5.6 times more expensive than in Q1 2021, and “represent a significant reversal from relatively low prices recorded over the past two years”.
Natural gas spot prices across the east coast have “surged to unprecedented levels”, the report added.
After reflecting briefly on the causes of the energy price spike — namely, planned generator outages, high domestic demand, and the fact conflict in Ukraine has intensified international the appetite for Australian gas exports — the ACCC issued a warning to generators and retailers.
“Specifically, we will monitor spot market bidding behaviour to identify any generators that may be bidding anti-competitively, including withdrawing supply or bidding dishonestly, fraudulently, or for the purpose of distorting or manipulating prices,” it said.
“We will also monitor the contracting behaviour of electricity generators to ensure they are not using their market power to anti-competitively restrict access to financial contracts.
“The ACCC will also take action if we have concerns that any retailer is in breach of the price cap, communication and advertising requirements set out in the Electricity Retail Code.”
High prices have already impacted small businesses, even without market manipulation.
In late May, the Australian Energy Regulator announced the default market offer price in NSW, southeast Queensland and South Australia would lift up as much as 13.5%, inflating power bills for households and businesses across the map.
The Council of Small Business Organisations Australia has urged small businesses to reach out to their retailer for assistance if they fall behind, after finding a “stigma” around asking for help may be putting a handbrake on hard-hit firms.
Retailers have also buckled under the pressure of spiking default market offer prices, with providers like ReAmped Energy now urging customers to leave in search of better deals.