Energy affordability issues are already hitting the manufacturing industry in Australia hard, ACCC Chairman Rod Sims told the National Press Club in a lunchtime address today.
The ACCC is currently conducting inquiries into both the affordability of retail electricity, and gas market supply and demand.
“We at the ACCC have been sounding the alarm in relation to business energy costs for some time. It is great that there is now considerable focus on this issue,” ACCC Chairman Rod Sims said.
“We have gas affordability issues for completely different reasons to those driving our electricity affordability issues. The gas shortage, however, is making the electricity affordability issues worse.”
“Moratoria and other regulatory restrictions in New South Wales, Victoria and Tasmania are preventing or impeding onshore gas exploration and development in those states, and particularly causing higher gas prices in the south,” Mr Sims said.
Mr Sims’ address outlined a number of issues that have contributed to the current electricity affordability crisis, particularly rising network costs, but also market concentration in generation.
“The rules never envisaged a generation market as concentrated as what we now have. In each state the combined market shares of the two or three most significant generators is well over 70 per cent, sometimes much higher.”
Mr Sims highlighted a number of affordability concerns across the retail, green, generation and network segments and said the ACCC would now focus on a range of affordability measures (see chart below).
“We are told we have three issues to deal with in electricity: reliability, sustainability and affordability. Basic economics says with three problems you need three different solutions. Beware of ‘silver bullets’ that are said to address all three objectives,” Mr Sims said.
Mr Sims’ address to the National Press Club is available at: Shining a light: Australia’s gas and electricity affordability problem
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