The Australian Competition and Consumer Commission (ACCC) has released draft guidelines which provide guidance on the compliance of three new laws designed to restrict price gouging amongst energy retailers.
The draft guidelines, which were released for consultation in early March 2020, provide examples and information about the new laws, which were introduced by the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Act 2019, and come into effect on 10 June 2020.
The three new laws restrict electricity retailers from keeping consumer and small business prices unnecessarily high, and stop generators from inflating wholesale prices or blocking access to critical contracts. These actions can have flow-on effects to the prices consumers and businesses pay.
ACCC Chair, Rod Sims, maintained that ensuring price fairness amongst consumers was of high priority to the ACCC.
“The ACCC will seek to ensure electricity companies set fair prices for customers and do not abuse their market position.
“Retail electricity prices have already come down under reforms introduced last year, and these guidelines are designed to help power companies understand how to fully comply with the new laws, for the benefit of consumers.”
The ACCC will continue to closely monitor the behaviour of companies in the electricity markets, and has a range of enforcement tools available ranging from public warning notices and infringement notices to commencing legal proceedings in the Federal Court alleging that companies have breached these laws.
“These new laws will enable us to take electricity companies to court if we have evidence that they are engaging in prohibited conduct in breach of these new provisions,” Mr Sims said.
The new laws prohibit the following conduct:
- The ‘retail pricing prohibition’ prohibits electricity retailers from charging small customers prices which are not adjusted to reflect sustained and substantial cost reductions in their underlying costs
- The ‘electricity financial contract liquidity prohibition’ prohibits generators from restricting access to electricity hedging contracts for an anti-competitive purpose
- The ‘electricity spot market prohibitions’ prohibit bidding practices by generators which are engaged in fraudulently, dishonestly or in bad faith and/or for the purpose of distorting or manipulating prices in an electricity spot market
The ACCC will release its final guidelines before these new laws come into effect on 10 June 2020.