New approach to monitor wholesale energy market launched

The Australian Energy Regulator is undertaking the first comprehensive assessment of Australia’s wholesale electricity markets to determine whether competition is effective during a period of rising wholesale prices and rapidly evolving generation mix.

The expanded wholesale market monitoring, introduced by COAG Energy Council amendments to the National Electricity Law, will form the basis of AER advice on wholesale market issues to the COAG Energy Council, relevant stakeholders and other market bodies.

AER chair Paula Conboy said the new powers and functions will allow the regulator  to examine the performance of the markets over the longer term to identify market inefficiencies and competition issues.

“This expanded role enables the AER to more deeply probe the manner in which wholesale markets are operating in order to enhance market transparency,” Ms Conboy said.

“It complements our existing monitoring of the wholesale markets which largely have a shorter term focus on compliance issues and high price events.”

Ms Conboy said the first report under the new powers – on the impact of the Hazelwood power station closure – will be presented to the COAG Energy Council in March next year.

The AER will then report on the broader markets every two years from December 2018.

The AER is seeking feedback from industry and other stakeholders on the development of a practical and systematic approach to assessing wholesale market performance.

The discussion paper released today outlines options for defining effective competition and efficiency, products and markets that should be considered, and the most relevant framework to assess market structure, participant conduct and market performance.

A public forum will be held in Melbourne on October 6, with submissions closing on October 13.

The AER proposes to release a draft approach in November, with further opportunities for feedback prior to finalising the approach in February 2018.