Victoria has been at the forefront of initiatives to reform and deregulate the energy sector. Reforms implemented from the 1990s onward, including the privatisation of the former State Electricity Commission of Victoria, have transformed the competitive landscape. Full retail contestability was introduced for Victorian small customers in the electricity and gas markets in January 2002.

In January 2009, the Victorian Government removed retail price regulation with the intention that consumers could fully benefit from the competitive market.

The removal of price regulation is supported by a regulatory framework that is intended to harness the benefits of competition, while ensuring that consumers have access to energy under fair terms and conditions, and at an acceptable service quality by maintaining effective protections.

Following deregulation of electricity and gas retail prices, the number of competitors has grown in the retail sector. In the 2015-16 financial year, 23 electricity and 11 gas retailers supplied the residential segment of the markets, 24 electricity and 10 gas retailers supplied small businesses, while 29 electricity and eight gas retailers supplied large businesses in Victoria.

Competition can bring benefits to consumers in the form of efficient prices, improved customer service and supply of innovative products and services.

Some observers suggest, however, that retail competition in electricity and gas markets in Victoria is not delivering benefits to consumers as expected. Following eight years of price deregulation, it is timely to consider whether the electricity and gas retail markets are delivering the best outcomes for consumers.

The Victorian Government has appointed an independent panel to conduct a review of electricity and gas retail markets in Victoria (the review). The panel comprises John Thwaites, Terence Mulder and Patricia Faulkner. The panel will prepare a final report to the Minister for Energy, Environment and Climate Change that examines the operation of the Victorian electricity and gas retail markets and provides options that would improve outcomes for consumers. The Terms of Reference for the review are at Appendix A. The independent panel will be supported by a secretariat administered by the Department of Environment, Land, Water and Planning (DELWP).