ADIA is the peak business organisation representing manufacturers and suppliers of dental products. Our vision is for an industry that empowers oral health professionals to advance the health and wellbeing of all Australians...................... — ADIA Strategic Plan

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ACCC Told To Act On Increasing Electricity Costs

ACCC Told To Act On Increasing Electricity Costs

14th Aug 17

Summary —

Reflecting concerns held by ADIA member businesses about escalating electricity costs, an Australian Competition and Consumer Commission (ACCC) inquiry has been told to reduce the spikes in prices and provide greater clarity on the contracts that business enters into with electricity suppliers.

Key Issues For The Dental Industry —

On 27 March 2017 the Australian Government directed the ACCC to hold an inquiry into the supply of retail electricity and the competitiveness of retail electricity prices.  This would review issues including the key cost components of electricity retail pricing and how they have changed over time in addition to the existence of, or potential for, anti-competitive behaviour by market participants and the impact of such behaviour on electricity consumers.

In response to this inquiry, ADIA has formally backed a submission made by the Australian Chamber of Commerce and Industry.  

The Australian Chamber and ADIA have stated that energy needs to be affordable, reliable and secure for both business and households.  It was in that context that both organisations have advocated for policies that will deliver a near-term reduction in electricity prices, followed by ongoing reductions in the real cost of energy over the longer-term.

The submission to the ACCC recognises that the current surge in electricity prices reflects a confluence of factors.  At the wholesale level, this includes the displacement of traditionally affordable coal baseload generating capacity and the current inability of alternatives (especially intermittent renewables) to fill the void and provide security and reliability to the system. The electricity system does not appear to be appropriate or fit-for-purpose and has been adversely affected by policy uncertainty. This changing dynamic has led to a changing role for gas, which is having upward pressure on prices. In some jurisdictions, gas is more frequently setting the wholesale electricity spot price.  With more intermittent generation in the system, gas plants may also be relied upon less often, meaning they may offer higher prices to be dispatched in order to recoup costs.

 

Recommendations To The ACCC Inquiry Into Electricity Pricing & Supply —

  The ACCC analyse whether the current generation mix and market structure is fit for purpose.
  The ACCC and other regulators and operators, be given powers to determine and publish the disaggregated market costs at the retail and wholesale level including all derivative activity.
  Greater consistency and clarity in billing, marketing materials and customer information is needed. This would include using standardised terms and language, billing and clauses. A voluntary industry code could be a useful first step.
  The ACCC, in consultation with regulators and operators, investigate examples of price spikes and determine their causes.
  The ACCC analyse whether the proposed five minute settlement rule could reduce price spikes.

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ADIA has supported advice to the ACCC that specific attention needs to be given to small business customers as part of the ACCC’s review.  Often, small businesses are overlooked, with focus on very large energy consumers and households. The former, while clearly impacted by higher prices, do have internal expertise to manage volatility that large market customers and small businesses may not. Households, while in many cases vulnerable, are given considerable attention and rising prices on the back of Government policy is often addressed with specific Government household payments.
ADIA member businesses have often expressed a view that understanding the offers from electricity retailers can be a challenge.  It was in this context that the ACCC was advised that there needs to be Greater consistency and clarity in billing, marketing materials and customer information is needed.

The ACCC is to present its preliminary report by 27 September 2017 and a final report by 30 June 2018.

Member Engagement —

ADIA provides leadership, strategy, advocacy and support. Our members set our agenda, fund our activities and directly benefit from the results. With respect to to matters associated with this matter, ADIA staff responsible for negotiating policy outcomes with government receive advice and guidance from members serving on the ADIA-TCPC Trade and Commercial Policy Committee.  Member updates are provided at the quarterly series of ADIA State Branch Briefings.

Further Information —

If you have an interest in ADIA's efforts to reform the regulatory standards for equipment installation, for updates subscribe to the Twitter feed @AusDental or follow us on Facebook at www.facebook.com/dental.industry. Alternatively, you can contact the Association via email at advocacy@adia.org.au or by telephone on 1300 943 094.

Currency Of Information & Disclaimer —

This update was issued on 14 August 2017 and please note that changes in circumstances after the publication of material or information may impact upon its accuracy and also change regulatory compliance obligations. The statements, regulatory and technical information contained herein are believed to be accurate and are provided for information purposes only. Readers are responsible for assessing its relevance and verifying the accuracy of the content. To the fullest extent permitted by law, ADIA will not be liable for any loss, damage, cost or expense incurred in relation to or arising as a result of relying on the information presented here. 

 


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