26 September 2023

Electricity prices paper up in the air

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The Independent Competition and Regulatory Commission (ICRC) has released an Issues Paper as its first step in a review on how it regulates prices for the supply of electricity to small customers.

The Commission said its review sought to ensure its form of price control remained effective, appropriate and recognised changes occurring in electricity markets.

“In this review, the Commission will consider current and potential market developments that may have implications for the effectiveness of the current form of price control,” the ICRC said.

“In this review, the Commission intends to examine the causes of compositional changes in ActewAGL’s customer base, how compositional changes are dealt with in the Commission’s approach, and implications of compositional changes for the ongoing effectiveness of the form of price control,” it said.

“The Commission will consider whether changes are needed to how the network cost pass-through is calculated to make sure the form of price control remains effective.”

The ICRC said it was seeking stakeholder input on any issues considered relevant to the form of electricity price control and the Issues Paper provided detail on its current form of price control.

It said the Australian electricity market was undergoing a rapid transition which had implications for its review.

“In the wholesale market, the generation mix is undergoing a rapid transition from a centralised system of large fossil fuel generators to smaller scale, dispersed renewable generation,” it said.

“In the ACT retail electricity market, and in retail markets in other jurisdictions, customers are moving from standing offer contracts to market offers reflecting affordability pressures, increased competition and calls by Governments and regulators to shop around for cheaper offers,” the Commission said.

The ICRC’s 27-page Issues Paper can be accessed at this PS News link.

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