ACT Considers Bill To Introduce Electricity Reference Price Framework

Thursday 22 April 2021 @ 8.33 a.m. | Corporate & Regulatory | Trade & Commerce

On 20 April 2021 the Utilities Amendment Bill 2021 (ACT) ("the Bill") was presented to the ACT Legislative Assembly by Treasurer, Andrew Barr, and the Minister for Water, Energy and Emissions Reduction, Shane Rattenbury. According to a joint Media Release, under the changes proposed by the Bill: 

"ACT Energy retailers will be required to tell their customers if a better deal is available, and make it easier to compare deals... Energy prices are notoriously hard to compare, especially for people who can’t afford the time it takes to navigate the best available deal out of providers...
“These new rules will require energy retailers to tell you about a ‘reference price’ – a common benchmark that your deal will be compared against – and to tell you if a better deal is available, without you having to ask."”

Background to Proposed Changes

The Bill's explanatory statement points out that regulating the price of electricity has contributed to the ACT having relatively lower prices than other capital cities. However, comparing offers and discounts is still a difficult task for consumers because of how deals are marketed and the different types of information that is provided.

The changes proposed by the Bill were recommended by the ACT’s Independent Competition and Regulatory Commission ("ICRC") and prioritised in the ACT's Parliamentary and Governing Agreement, in which the ACT Government committed to implement the ICRC’s recommendations in 2021 under the Agreement (Action A.1(x)) in order to make it simpler for ACT customers to get better energy deals. In its 2020-24 Electricity Price Investigation Report ("the ICRC's Report"), the ICRC recommended that a reference price framework be introduced to improve the comparability and transparency of electricity offers in the ACT. The ICRC recommendation is similar, according to the explanatory statement, to the national Default Market Offer scheme applying in NSW, South East QLD and SA and the Victorian Default Offer scheme.

Consultation Leading to the Proposed Bill

According to the Bill's explanatory statement, the concept of a reference price framework and main components/parameters for the framework were consulted on as part of the ICRC’s Report and its electricity price investigation project in 2019-20. The ICRC is currently undertaking further consultation on a draft industry code which covers the detailed requirements for retailers to implement the new obligations created under the provisions of the proposed Bill.

Changes Proposed by the Bill

The Bill inserts new provisions into the Utilities Act 2000 that would:

  • grant power to the Treasurer and the Minister for Water, Energy and Emissions Reduction to determine the reference price through a notifiable instrument; 
  • require energy retailers to provide information that allows customers to compare different offers, via a reference mechanism; and
  • introduce a "Clear Advice Entitlement" to require retailers to notify existing customers if they have a better offer.

As part of the changes proposed by the Bill, an industry code is being developed by the ICRC, which will set out how and when retailers must provide the information to customers. The ICRC will be responsible for monitoring compliance with the code and a maximum of 3000 penalty units apply for each occurrence of non-compliance with an industry code - penalty units are currently $810 for a corporation, equating to a maximum of $2,430,000

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