The Competition and Consumer (Industry Code—Electricity Retail) Regulations 2019 (the Code) comes into force on 1 July 2019. The Code is prescribed as a mandatory industry code under the Competition and Consumer Act 2010 (Cth) (the Act). The Code is binding on all electricity retailers that supply electricity to small customers in the applicable distribution regions.
The purpose of the Code is to:
- limit the standing offer prices that are charged to residential and small business consumers
- allow consumers to more easily compare market offers and
- prohibit conditional headline discounting.
In the ACCC’s 2018 Retail Electricity Pricing Inquiry (REPI) final report, we found that standing offer prices charged to consumers who are inactive or disengaged from the market were unreasonably high. We also found that the marketing of retail offers was focused on headline discounts, but these discounts were not calculated off the same base price and were often conditional. This meant that consumers could not effectively compare offers. To address these issues, we recommended the introduction of a default price to replace excessive standing offers, and a requirement for discounts to be calculated with reference to this default price as well as headline discounts to only include unconditional discounts. These recommendations sought to improve the ability of consumers to engage with the market, enabling them to make an informed decision about the retailer and tariff that is best suited to their needs and circumstances. These recommendations were the basis for developing the Code which will be implemented in South Australia, New South Wales and south-east Queensland.
The ACCC promotes, monitors and enforces compliance with the Code and the Act. We recognise the need for customers to understand and trust the information required by the Code. To ensure this understanding, all market participants will need to educate customers by consistently explaining the information required by the Code as well as its intent. The ACCC will be monitoring and reporting on the broader effects of the Code on standing and market offers and advertising practices as part of our inquiry into the supply of electricity in the National Electricity Market (NEM). In particular, the ACCC will be tracking whether standing offers that are currently below the price caps remain so, whether the number of market offers available changes and if there are increases in market offer prices, especially low-priced market offers, following the introduction of the Code. More generally, we will be monitoring and reporting on the effect of these policy changes on the prices faced by consumers, including both the level and spread of offer prices.
This guide is designed to help electricity retailers understand their responsibilities under the Code. It offers guidance on:
- which retail electricity offers are covered by the Code
- how the cap on standing offer prices works
- how offers must be compared to the reference price
- how conditional discounts can be presented
- the consequences of non-compliance with the Code.