Calls for energy companies to dismantle their empires
Summary: CASHED-up power giants AGL, Energy Australia and Origin face being forced to dismantle their empires to boost competition and slash energy prices.....
Influential Senator and former Turnbull Government Cabinet Minister Matt Canavan has formally requested the competition watchdog to investigate whether Australia needs divestment power under the National Electricity Law.
In an extraordinary correspondence to the Australian Competition and Consumer Commission, Senator Canavan has asked ACCC chairman Rod Sims to consider the need for divestment powers in a review into power prices ordered by Treasurer Scott Morrison.
While a draft report is expected to be released by next week, the final report is due on June 30.
Exclusively obtained by The Courier-Mail, the correspondence sent yesterday questions whether Australia should have the same powers that other countries have to protect consumers.
“I am concerned that we may not have the policy tools in Australia to respond adequately (and) as you would be aware, in Australia, once a merger is approved there is no possibility of allowing for future divestment except for some limited provisions under Australia’s foreign investment review regimen,’’ Senator Canavan said.
“This position is at odds with many other countries which make provision for splitting up of a company as a remedy for anti-competitive conduct, albeit only in extreme circumstances.
“There is a case that some practices in the electricity sector are approaching a severe demonstration of anti-competitive conduct but we do not have the corresponding penalties that other countries do to deter such behaviour.
“For example, according to the Australian Energy Regulator the three large retail electricity providers, AGL, EnergyAustralia and Origin have increased their market share from 15 per cent in 2009 to 46 per cent in 2016.”
“Recently in Queensland the large government owned corporations have been accused of bidding in an anti-competitive manner. On June 5 this year, the Queensland Government directed Stanwell “to undertake strategies to place downward pressure on wholesale prices”.
“Wholesale electricity prices in Queensland have fallen by 25 per cent subsequently,’’ Senator Canavan said.
“There have been reports of similar behaviour in southern markets, and often large electricity generation units run well below theoretical capacities.”
“I would encourage you to use this review as an opportunity to conduct a root and branch examination of the appropriate penalties for a anti-competitive conduct in general, and in particular, whether a divestment power in the National Electricity Law would help respond to the reduction in competition we have seen.”
A spokesman for the ACCC confirmed the correspondence had been received but would not comment further.