AER launches new approach to monitoring wholesale electricity markets

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 6 October, with submissions closing on 13 October. The AER proposes to release a draft approach in November, with further opportunities for feedback prior to finalising the approach in February 2018. 

About the AER

The Australian Energy Regulator regulates energy markets and networks under national legislation and rules in eastern and southern Australia, as well as networks in the Northern Territory. Its functions include:

  • monitoring wholesale electricity and gas markets to ensure energy businesses comply with the legislation and rules, and taking enforcement action where necessary;
  • setting the amount of revenue that network businesses can recover from customers for using networks (electricity poles and wires and gas pipelines) that transport energy;
  • regulating retail energy markets in Queensland, New South Wales, South Australia, Tasmania (electricity only), and the ACT;
  • operating the Energy Made Easy website, which provides a retail price comparator and other information for energy consumers;
  • publishing information on energy markets, including the annual State of the energy market report, to assist participants and the wider community.
Issued date: 
31 August 2017
AER reference: 
NR 25/17
AER Media 0466 409 921