Regulation Impact Statement Updates
Official website for publishing regulatory impact analysis information for regulatory decisions announced by the Australian Government, COAG and COAG Councils.
Default Market Offer price cap and reference bill on retail electricity prices
Regulation Impact Statement – Department of the Environment and Energy
On 4 April 2019, the Government made the Competition and Consumer (Industry Code- Electricity Retail) Regulations 2019 (the Code) under the Competition and Consumer Act 2010. The Code is a mandatory industry code and introduces a Default Market Offer (DMO) price cap and a reference bill on retail electricity prices. The Code will take effect from 1 July 2019 in price-deregulated regions (South Australia, New South Wales, the Australian Capital Territory and South East Queensland).
The DMO places a price cap on electricity retailers’ standing offers. Under this code, retailers will not be able to price their standing offers above the price cap. The objective of the DMO is to reduce incentive for retailers to take advantage of disengaged customers in the market.
A reference bill ensures all offers must be compared to the same base rate, which will be set at the same price as the DMO. Customers will be able to identify which are the cheaper or more expensive offers available in the retail electricity market.
The Department of the Environment and Energy (the Department) was compliant with the Australian Government RIS requirements. However, the Department was not consistent with best practice. This is due to an insufficient analysis on how the recommended option delivers the highest net benefit to the community and the absence of a consultation RIS on the merits of such a significant proposal and viable alternative options.
The RIS estimates the average annual regulatory cost of the proposal to be $1.849 million. The OBPR agreed that, as the costs were less than $2 million per annum, regulatory costs could be self-assessed by the Department.