Prior to 2014, IPART set a regulated retail price for electricity customers. Retailers could offer different prices to customers, but customers who did not accept a “market offer” were charged the regulated rates set by IPART.
IPART has not set regulated electricity prices since 2014, which means that all retailers set their own prices. When competition is working well, retailers will compete with each other to offer customers the lowest possible prices. This should drive better outcomes than regulated prices, because retailers have better information than a regulator about the costs of supplying electricity to its customers. Retailers will go out of business if the regulator sets prices too low, but customers will pay more than they should if the regulator sets prices too high.
Now that we are relying on competition to keep prices as low as possible for customers, it is important to understand whether competition is effective. Therefore, the NSW Government has tasked IPART with monitoring the performance and competitiveness of the electricity retail market for small customers.
As the Market Monitor, we are required to report annually to the Minister. Our 2017 report will be our third annual monitoring report on the retail electricity market.