Monitoring competition in the NSW retail electricity market - December 2014

Following deregulation of retail electricity prices in NSW from 1 July 2014, the NSW Government has asked IPART to monitor competition for small customers in the retail electricity market.

This fact sheet provides an overview of IPART’s new role, how we propose to approach it, and how stakeholders can be involved.

1. What we have been asked to do

IPART’s role as ‘Market Monitor’ is set out in the National Energy Retail Law (NSW) (the Act).

The Act calls for the Market Monitor to report annually to the Minister for Resources and Energy on the performance and competitiveness of the retail electricity market in NSW, including:

• the participation of small customers in the market and, if the Market Monitor thinks it appropriate, particular groups of small customers
• prices of electricity for small customers in regional areas
• any barriers to entry to or exit from, or expansion, in the market
• the extent to which retailers are competing to attract and retain small customers
• whether price movements and price and product diversity in the market are consistent with a competitive market
• if the Market Monitor is of the opinion that it is required, steps necessary to improve the competitiveness of the market
• whether there is a need for a detailed review of retail prices and profit margins in the market (ie, ‘special review’), and
• any other matters the Market Monitor thinks appropriate.

2. Information we must have regard to

The Act outlines the information we can have regard to in preparing annual reports. The Market Monitor is to have regard only to the following:

• information provided by the Australian Energy Market Commission (AEMC) and the Australian Energy Regulator (AER)
• any publicly available information
  information provided by a retailer under section 234A, subsection (8) of the Act, as shown below.

(8) The Market Monitor may, by notice in writing served on a retailer, require the retailer to provide particulars to the Market Monitor of the number of market offer customers of the retailer, the market offer prices of those customers, the number of customers on each standing offer price offered by the retailer that
as been publicly advertised and those standing offer prices.

3. How we propose to approach this task

Table 3.1 summarises issues we are required to consider and how we propose to obtain relevant information.

The AER and the AEMC already collect and report on a significant amount of information on the retail electricity market. As a result, we will work with the AER and the AEMC to obtain most of the information relevant to our review.

Table 3.1 - Approach to IPART's market monitoring review

As indicated above, to assist us in assessing price movements and price and product diversity we also propose to collect pricing information from retailers.

We propose to request pricing information on standing offers, lowest generally available market offers, and most common offers (by number of customer) for both residential and small business customers in each electricity supply area in which the retailer is active.⁽¹⁾ This information will allow us to examine price movements for the majority of customers.

As part of our annual monitoring report we will also consider whether:

• any actions are required to improve the competitiveness of the market
• a special review of retail prices and profit margins in the market is required.

4. How stakeholders can be involved

Our proposed timetable for the 2015 annual report is outlined in Table 4.1 below. We invite comments from stakeholders on the proposed approach outlined in this fact sheet:

• Are there any other issues that IPART should have regard to in reporting on the performance and competitiveness of the retail electricity market in NSW
• Are there any other sources of information relevant to our assessment (bearing in mind the information IPART can have regard to outlined in section 2)?

Submissions to this fact sheet will close on 13 February 2015.


Table 4.1 Timetable for the 2015 annual report

We will release preliminary views on the performance and competitiveness of the retail electricity market in NSW in our draft report in July 2015. Stakeholders will also have an opportunity to comment on these preliminary findings.

Our first annual report will be provided to the Minister by 30 November 2015.

⁽¹⁾ This information is currently provided by retailers to the ACCC as part of their role in monitoring the carbon repeal. ACCC, Report to the Minister under s95ZE of the Competition and Consumer Act 2010, October 2014, p 47.