IPART has commenced its annual review of the performance and competitiveness of the retail electricity and gas markets in NSW for the most recent financial year. We must report to the Minister for Energy and Utilities by 30 November 2019
We are looking at outcomes for residential and small business customers in NSW.
What is IPART’s role?
The NSW Government tasked IPART with monitoring the performance and competitiveness of the retail electricity and gas markets for residential and small business customers in NSW. 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 2019. Stakeholders will have an opportunity to comment on our draft findings before we submit our Final Report to the Minister by 30 November 2019.
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 innovation, 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:
- Any publicly available information, such as: 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, findings from the ACCC’s electricity market monitoring reports, ACCC’s Electricity Supply and Prices Inquiry, the ACCC gas inquiry, complaints data published by the Energy and Water Ombudsman NSW (EWON), AEMO data on customer transfers, published network tariffs, and AER determinations on network pricing.
- Information obtained from NSW electricity and gas retailers, including tariffs and customer numbers for standing and market offers during 2018-19.
- Information provided by the AEMC, such as its annual competition review, findings from its consumer and retailer surveys, and its annual price trends report. (such as retailer customer numbers)., The AER’s ‘State of the Energy Market’ report, its 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
- – customer applications for digital meters.
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 does our review complement other energy market reviews?
IPART’s role is to review outcomes for residential and small business customers in NSW. However, a number of other organisations play a role in ensuring effective competition and performance in electricity and gas markets, both nationally and in NSW. We will consider the outcomes of their reports and inquiries as part of our review.
How can stakeholders get involved?
Stakeholders will be able to make submissions on our Draft Report to be released in September 2019.
We are not seeking stakeholder submissions at this stage of the review.