‘Big stick’ electricity guidelines released
The competition watchdog has released its framework to enforce new “big stick” powers from next month, including taking companies to court or forcing them to divest assets, in a crackdown on energy companies gouging electricity bills.
The Australian Competition & Consumer Commission guidelines prohibit electricity retailers from keeping prices “unnecessarily high” when costs fall and ban generators from “inflating wholesale prices or blocking access to critical contracts”.
ACCC commissioner Rod Sims said the laws, which fall under the Competition and Consumer Act, would come into effect from June 10.
“These new laws commence at a time when the affordability of energy is particularly pressing for so many Australian businesses and households, as communities are impacted by the COVID-19 pandemic,” Mr Sims said.
Mr Sims said the ACCC guidelines would assist electricity companies in complying with the new laws and delivering cheaper energy prices for customers.
“Wholesale prices have reduced significantly over the past couple of months, so retailers should be assessing their prices and ensuring that they are prepared when the new laws come into effect in June.”
The ACCC is closely monitoring the behaviour of energy companies and will use enforcement measures including public warning notices, infringement notices and legal action through the Federal Court.
Mr Sims said the laws allowed the ACCC to take electricity companies to court if evidence showed they were “engaging in prohibited conduct in breach of these new provisions”.
The big stick laws were passed through parliament in November last year following a report and public inquiry run by the ACCC focused on the prices, profits and margins in supplying electricity in the National Electricity Market.
Since November, there have been seven consecutive months of wholesale price reductions with falls across energy and gas prices.
Energy Minister Angus Taylor said the big-stick powers, in addition to the default market offer, would offer more protection for Australian energy users.
“The beginning of the big stick on 10 June of this year couldn’t have come at a more important time, with significant and sustained reductions in the wholesale energy price and increased hardship for consumers due to COVID-19,” Mr Taylor said.
“It is important these wholesale price reductions are passed on to consumers, and the big stick will ensure that.
“The big stick has always been about delivering fair prices and protecting Australian families and businesses.”
Under the ACCC guidelines, energy companies who are found to have engaged in misconduct could be forced to divest their assets.
While the big stick legislation does not strictly prohibit retailers from increasing their prices, increasing or failing to reduce prices during times of sustained and substantial reductions in wholesale prices could breach retail prohibition guidelines.
With wholesale prices making-up about a third of retail energy bills, the government expects the new measures will deliver significant savings for energy customers.