IPART has commenced its annual review of the performance and competitiveness of the retail electricity and gas markets in NSW for 2019-20. We must report to the Minister for Energy and Environment by 30 November 2020.
We are looking at outcomes for residential and small business customers in NSW.
What is IPART’s role?
Following deregulation of the NSW retail electricity market in 2014, the NSW Government tasked IPART with monitoring the performance and competitiveness of the retail electricity market for residential and small business customers in NSW. When the NSW Government deregulated retail gas prices from 1 July 2017, the Government expanded our role to include monitoring the performance and competitiveness of the gas market. Our role is set out in the National Energy Retail Law (NSW) (the Act). This specifies how we must carry out our role, the matters we must consider, and what information we may consider in making our findings and recommendations.
What is the timetable for the review?
We will release our preliminary findings in our Draft Report in September 2020. Stakeholders will have an opportunity to comment on our draft findings before we submit our Final Report to the Minister by 30 November 2020.
How will we assess competition in retail markets?
As we have done in previous years, we will assess competition in the retail gas and electricity markets against four key indicators including, barriers to entry, exit or expansion, customer participation and outcomes, rivalry and price and product diversity, and whether changes in prices reflect changes in costs (Table 1).
Section 234A of the Act limits the information that we can use for this assessment. We are only able to consider publicly available information, information provided by retailers, and information provided by the Australian Energy Market Commission (AEMC), and the Australian Energy Regulator (AER). In addition to seeking feedback from all stakeholders, including consumers, we will review and assess publicly available information, such as:
- AEMC annual competition reviews, findings from its consumer and retailer surveys, and its annual price trends report,
- retail offers available on the AER’s energymadeeasy.gov.au website,
- NSW’s Energy Switch website,
- St. Vincent de Paul Society’s NSW Tariff-Tracking Report,
- ACCC electricity market monitoring reports,
- ACCC Electricity Supply and Prices Inquiry,
- ACCC gas inquiry,
- complaints data published by the Energy and Water Ombudsman NSW (EWON),
- AEMO data on customer transfers, published network tariffs,
- AER determinations on network pricing.
- AER ‘State of the Energy Market’ report, annual report on compliance and performance of the retail energy market, the wholesale electricity market performance monitoring reports, and its performance statistics
We are also required to report on the price of electricity and gas in regional areas when we are assessing the performance of the energy market. To do this, we will consider price data from retailers, network tariffs in each region, energymadeeasy.gov.au, NSW Energy Switch and St. Vincent de Paul Society’s NSW Tariff-Tracking Report.
Table 1 Indicators for assessing competition in NSW retail electricity and gas markets
Factors we will consider
Barriers to entry, exit or expansion
- Changes in market structure and concentration, including number of retailers and market shares.
- Whether regulatory or non-regulatory costs and impediments might be barriers, eg:
- ability for retailers to hedge at a reasonable cost (in particular smaller retailers)
- economies of scale,
- economies of scope, and
- exit costs.
Customer participation and outcomes
- How customers are engaging with the market, and customer outcomes, including:
- number of customers switching retailers or switching plans with the same retailer
- customers’ views on the ease of comparing market offers and of switching retailer or plan
- customers’ satisfaction with their current plans, or their decisions to switch retailer or plan
- key areas of customer concern and retailers’ responses to them
- number of customer complaints
- outcomes for vulnerable customers
- how prices compare for time-of-use tariffs and all-day tariffs.
Rivalry and price and product diversity
- Extent of rivalry to attract and retain customers, including competition in price and product offerings. We will consider:
- changes in retailer market shares
- data on customers switching retailers or plans with the same retailer, and
- innovation and diversity in prices, products and services, including emerging technologies in digital metering, solar, embedded networks and stand-alone energy storage.
- Whether price movements are consistent with a competitive market.
- Whether there is a need for a detailed review of retail prices and profit margins.
- We will consider:
- price movements of standing and market offers, and price differences across retailers, including time of use tariffs and any other innovative pricing offerings, and
- changes in cost components.
How can stakeholders get involved?
IPART will collate and consider information from the sources listed above and release a Draft Report for stakeholder feedback in September 2020. If you would like to register for updates on the review please email IPART’s Key Contact listed below.