The role of the ACCC in Australia's economic wellbeing and energy regulation: past, present and future

A recent report by the Department of Primary Industries and Energy found that demand for energy in Australia is projected to increase by 50 per cent by 2020, and the energy industry estimates that investments of at least $37 billion will be required by 2020 to meet the nation's energy needs. They are awesome statistics and place a great responsibility on the Australian Competition and Consumer Commission to ensure we get the balance right when it comes to regulating the energy sector. That balance involves the right of those making those massive investments in energy sources and infrastructure to earn a decent return while at the same time ensuring these resources can continue to be made available at a price that as far as possible mimics a competitive market and does not lead to the exploitation of monopoly positions. And we have to do this in a way that ensures that whether industry or consumers choose gas or electricity is not determined by differing regulations in those sectors but by allowing both to develop in a way that encourages competition within, and between the two, to the benefit of industry, end users, and the nation. This is the philosophy behind the creation of the most recent evolutionary development in energy regulation - the Australian Energy Regulator. I will talk more about the AER shortly, but first I would to look at the record so far. NCP reforms The AER is the result of a decade of National Competition Policy reforms in the energy sector to open up the former government-controlled intra-state monopolies in gas and electricity to competition and make them more efficient. Although reforms proceeded on a sectoral basis, federal, state and territory governments agreed through the Council of Australian Governments to similar reforms for both industries, including: 1. Placing utilities on a commercial footing through corporatisation 2. Vertically separating generation, transmission, distribution and retail businesses and 'ring-fencing' these businesses from other activities 3. Allowing for customer choice of supplier through full retail contestability 4. Encouraging third party access to transmission and distribution infrastructure on fair and reasonable terms 5. Removing restrictions upon interstate trade and, in the case of electricity, establishing the National Energy Market (NEM)