(Australian Associated Press)
Electricity companies failing to ease power bills as their wholesale costs fall will soon be facing “big stick” of penalties.
They will range from warnings to court-enforced divestiture of assets if the big power companies do not comply with the laws, which passed federal parliament last year and begin on Wednesday.
Energy Minister Angus Taylor said the powers would ensure households, businesses and industries get a fair deal on energy.
“The law will help build consumer trust in the electricity market, and ensure energy companies provide the best possible service to households and businesses,” Mr Taylor said.
“We hope and expect that the penalties under the ‘big stick’ won’t be needed as new competition and supply enters the market, eliminating old distortions.”
The Australian Competition and Consumer Commission will be responsible for enforcing the laws until 2025.
The watchdog will have at its disposal penalties ranging from public warnings and court-ordered fines to Treasurer-issued contracting orders and court-ordered divestiture.
The main contributing factors to recent high electricity prices are a lack of transparency and competition, with three big energy companies controlling nearly 60 per cent of the generation and retail market in almost every region.
The laws work in three ways:
* Retail Pricing Prohibition – an electricity retailer must reasonably reduce its prices when there is a substantial drop in the costs it faces to supply electricity.
* Contract Liquidity Prohibition – penalises generation companies that refuse to offer electricity financial contracts for the purpose of substantially lessening market competition.
* Wholesale Prohibition – penalties will be imposed where generators artificially manipulate prices.
Average electricity prices in the first quarter of this year were below $110 per MWh in all regions for the first time since 2015, due to a generally mild summer and more rooftop solar.