Increased Retailer Reporting and the CDR in NSW

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At the end of December 2019, the Independent Pricing and Regulatory Tribunal NSW (IPART) released its final report on its Review of the Performance and Competitiveness of the NSW Retail Electricity Market for 2018-2019 (Report). We previously provided an update upon the release of the interim report here. The Report found that smaller retailers have continued to increase market share and that prices fell for those customers engaged in the market. IPART also made three recommendations to the Minister for implementation in NSW going forward. These recommendations are aligned with two significant changes in the energy sector in 2020: i) the Consumer Data Right; and ii) increased price regulation and financial reporting.

Recommendation 1: Interval meter data on comparison sites

IPART recommended that: “Energy Made Easy and NSW Energy Switch should allow customers to input interval meter data to make more accurate estimates of customers’ bills under different offers. This should be ready for the launch of the Consumer Data Right on 1 July 2020”.

The Report found that more than 65% of customers in the Ausgrid distribution area would benefit from moving to time of use tariffs, but noted that the current comparison websites could be more useful to customers with time of use meters. NSW Energy Switch is a NSW Government backed price comparator service which operates by analysing customer bills, while the AER’s Energy Made Easy website allows customers to input their own data.

Noting the introduction of the Consumer Data Right for the energy sector later this year, IPART was conscious of the shift towards consumers taking control of their data and it is logical that energy regulators are in step with the Consumer Data Right being introduced by the Australian Competition and Consumer Commission (ACCC).

Recommendation 2: Publication of Bill and Consumption Data

IPART recommended: “that the NSW Government publish more information on the distribution of consumption and bills for customers that have used the NSW Energy Switch website to help inform regulators on how prices actually paid by customers are changing over time. This should be broken down by network area, market vs standing offers and published each financial year to identify differences pre and post the implementation of the Default market Offer (DMO)”.

This suggestion aligns with the recent rule change proposal to require regular financial reporting by retailers to assist regulators – the Retail Market Transparency Rule discussed here. The general tenor from policymakers and regulatory agencies has been that they do not have enough information to accurately report on the state of the retail market. In IPART’s case, the information it could have regard to was limited by statute.

The rationale is that publishing this information would assist the national regulators in their annual reporting on energy markets. However, given the information will be limited to NSW and other jurisdictions will not necessarily have access to similar data, it may be of limited use to the AEMC, AER and ACCC.

Recommendation 3: Removal of Market Monitor

IPART stated that: “Market monitoring by multiple agencies increases costs for taxpayers, retailers and consumers. Rather than requiring IPART to duplicate annual market monitoring, a better use of resources would be for IPART to investigate or review NSW specific matters as required”.

The primary reason given for this change is the implementation of the ACCC’s market monitoring role for the electricity market as a whole. It will report every 6 months on the state of the market for 7 years and has similar information gathering powers to IPART, but is not limited to NSW only. ACCC reporting is in addition to the annual reports on the retail market developed by the AEMC and the Australian Energy Regulator. It was noted that “market monitoring by multiple agencies increases costs for taxpayers, retailers and consumers”.

Importantly, while the regular annual reporting function is set to be abolished, IPART will still be available to review or investigate special matters pertaining specifically to the NSW market as required. The last time this function was exercised was in respect of metering installation timeframes in 2018.

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