Jim Chalmers asks ACCC to probe energy market

With power prices trading five times higher than they were a year ago, the competition watchdog will probe the profits of energy companies.

The competition watchdog will probe energy companies’ profits and margins amid soaring electricity and gas prices.

Power prices are trading five times higher at present than they were a year ago, prompting Treasurer Jim Chalmers to write to the Australian Competition and Consumer Commission and ask the regulator to investigate potential price gouging and anti-competitive conduct.

The ACCC confirmed they would launch a probe into a number of companies, and would also assess any need for regulatory change to ensure the markets are functioning properly.

The move comes after the Australian Energy Market Operator made the unusual move last week to suspend the national electricity market by intervening and set caps on power and gas amid widespread blackout risks.

ACCC chair Gina Cass-Gottlieb said the regulator would use its power to provide greater transparency to Australians.

“Under direction from the federal government, we will use our full information gathering powers to provide greater transparency around the factors influencing electricity and gas prices, including profits and margins from a wide range of energy companies,” Ms Cass-Gottlieb said.

“In line with the Treasurer’s request, we will also assess and bring to the government’s attention any need for regulatory change to ensure electricity and gas markets function properly for the benefit of all Australian consumers.

“In addition, the federal Energy Minister with the state and territory energy ministers have requested the ACCC, as part of its ongoing inquiries on the national energy market, to report back in July 2022.”

The ACCC acknowledged global factors, namely Russia’s war in Ukraine, had heavily impacted global gas supply and prices.

“(And) a cold start to winter and a reliance on ageing coal-fired power stations amplified challenges already facing the Australian energy market,” Ms Cass-Gottlieb said.

“We are acutely aware of the pressures that rapidly rising energy prices are placing on Australian households and businesses.”

Government frontbencher Bill Shorten said he welcomed the ACCC probe.

“I’m pleased they’re looking into this. Energy companies should not be making undue profits when everyone else is doing it hard with cost of living and a winter snap, and we have got an energy system which is just 10 years of delay and denial,” Mr Shorten told the Nine Network.

“It’s prudential. The energy companies will make their case to the ACCC. But I think a lot of Australians are wondering – are the energy companies taking advantage of this?

“We will get to the bottom of it.”

Ms Cass-Gottlieb said they were working closely with the Australian Energy Regulator, and they had co-written to energy retailers to “remind them of their obligations” in relation to electricity prices.

Retailers cannot set the price of their standing offers above the “safety net” set by the AER’s default market offer – or in Victoria, the default offer set by the Essential Services Commission.

Originally published as ACCC to launch probe into energy companies amid high electricity and gas prices

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