Crisis measures: What public servants are doing to reckon with Australia’s energy supply

By Melissa Coade

July 5, 2022

Gina Cass-Gottlieb
ACCC chair Gina Cass-Gottlieb. (AAP Image/Bianca De Marchi)

Officials from the Australian Competition & Consumer Commission will temporarily lift competition rules in the gas and electricity markets to support the nation’s energy supply and systems during what decision-makers are now describing as an all-out ‘crisis’.

The interim decision will be subject to strict conditions and grants a range of temporary measures that will allow energy-sector participants to work together to address the safety, security and reliability of Australia’s energy supply.

In a statement, ACCC chair Gina Cass-Gottlieb said the authorisation would continue until a final determination was made ‘having taken the views of interested parties into account’.

“A reliable and secure energy supply is essential for both for industry and the community,” Cass-Gottlieb said. 

“Co-operation between the industry participants in the short term is appropriate at this time for building resilience in the gas and electricity supply systems and minimising the risk of load shedding and blackouts.”

‘Unprecedented pressure’ is what the commission has described as the challenges facing Australia’s energy markets, citing extreme winter weather conditions, a national reliance on ageing coal-fired power stations, and higher global gas supply and prices driven by Russia’s invasion of Ukraine. 

Last Friday, the ACCC said it was acting on an urgent application for interim authorisation to lift, under certain conditions, competition requirements that would permit industry cooperation for a period of nine months. This will permit measures such as the sharing of essential personnel, parts and equipment, as well as certain operational information.

The measure will apply to participants such as electricity generators, retailers, network service providers, metering service providers, and other electricity industry-specific service providers. Gas industry participants covered include producers, traders, retailers and storage providers. 

Conditions of the temporary measure include a requirement for the Australian Energy Market Operator (AEMO) to record and report on agreements reached between participants. The ACCC must also be able to attend any meetings between market participants and the AEMO that are held during the authorisation period.

Cass-Gottlieb warned the ACCC would revoke or vary the measures if there was any concern parties were being anti-competitive as opposed to ‘being reasonably necessary to address the energy crisis’. 

“We will be very closely monitoring the conduct of the energy providers. 

“Through the course of consultation, we will be working to limit the scope of the authorisation to only that which is reasonably necessary,” the ACCC chair said.

While a final decision about the length of the authorisation has not been made, the AEMO application requested a reprieve for the current winter through to the end of the peak summer period.

Meanwhile, the Queensland energy minister has told energy retailers they must pass on cost of living rebates announced in the recent state budget. 

Mick de Brenni said the state government was able to hand down a sixth consecutive energy rebate (amounting to $1 billion of electricity bill relief in premier Palaszczuk’s term) due to public ownership of Queensland’s energy assets. 

“Historically retailers have done the right thing, however today I’m reminding energy retailers to pass on the $175 rebate to all households and warned that they will be named and shamed if they do not,” de Brenni said. 

The minister added with the commencement of the new financial year, he was concerned of the unfair impact on citizens compounded by market fluctuations and the decision of some retailers to bump their prices above the Australian Energy Regulator’s Default Market Offer.

“Queenslanders are reminded that they have a right to be not only be offered the Default Market Offer but to see how it compares with the retail offer or they can shop around for a better deal,” de Brenni said.

“Queensland households should also look for a message on their bill which refers to the $175 cost-of-living rebate.”

Under section 91 of the Competition and Consumer Act 2010, the commission can grant interim authorisation for conduct that might otherwise raise concerns under the competition provisions. To do so, the ACCC must be satisfied that the likely public benefit from the conduct outweighs any likely public detriment.

The ACCC granted a similar interim authorisation to the AEMO and industry participants to respond to issues arising from the impact of COVID-19. That authorisation period runs from February to October 2022.

“The ACCC will seek to ensure that any measures taken during this current crisis do not have adverse effects on competition into the future,” Cass-Gottlieb said. 

 


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