www.eraa.com.au

About the Energy Retailers Association • Peak body representing electricity and gas retailers in

the national energy markets

• Members are mostly privately owned and vary in size

• Members are large, medium and niche retailers

• National coverage including WA

• Members have more than 10 million customers – more than 3 million gas customers

• Most customers are dual fuel though electricity is the predominant fuel

Our members

2007

 Australian energy market reform

2002

1995

1994

1990-1

Industry Commission inquiry

National Competition Policy Review Committee - Hilmer

Competition Policy Agreements

Energy Markets Review - Parer

Energy Reform Implementation Group -

Scales

Privatisation commenced 1995

…led to energy market reforms

• Price Deregulation (Victoria and South Australia)• Australian Energy Market Commission• Australian Energy Regulator• Australian Energy Market Operator

• National Electricity Market• National Energy Customer

Framework (NECF)• National Competition Policy• Full Retail Contestability

The competitive framework in Australia

Generation market

Competitive market with few existing participants.

New entrants encouraged by governments' renewable energy and other policies.

Independently governed access arrangements to enable energy distributors to purchase supply on fair and equitable terms.

Distribution market

Natural monopoly market with several participants.

New entrants restricted by government policy.

Network tariffs regulated by government.

Retail market

Contestable market with multiple participants.

New/existing entrants encouraged by price signals, government policy and market conditions.

Customer service focus.

Consumer protection laws apply.

Retailers deliver CSOs like government funded rebates.

The current structure of the energy market

Regulatory situation

Consumer benefits of energy price deregulation include: – product innovation– improved customer service and responsiveness– option to shop around for better offers – save on the standing price

Jurisdiction Pathways to price deregulation

Victoria Price monitoring 1 January 2009

South Australia Price monitoring 1 February 2013

NSW Subject to AEMC reviewThree year price path set by IPART

Queensland One year price pathRecovery from tariff freeze

What does energy price deregulation look like?

• Price monitoring to local regulators– Victoria www.esc.vic.gov.au/ – South Australia www.escosa.sa.gov.au/

• Governments retain power to re-regulate

• Implementation of non-price consumer framework - NECF

Retailer market share

• Diagram from research undertaken by Deloitte Access Economics 2012

0%

20%

40%

60%

80%

100%

08/09 09/10 10/11 09/10 10/11 06/07 07/08 11/12

VIC NSW QLD

Top 3 New entrants

Diagram from research undertaken by Deloitte Access Economics 2012

Breakdown of a typical electricity bill

State of the Energy Market 2012

Electricity demand is falling

• Solar PV penetration • Decentralised generation • Solar hot water • Energy efficiency • Price elasticity of demand • Commercial and industrial load

Solar PV penetration

Smart meters – peak demand

ERAA released five smart meter working papers examining key policy discussions:

1. The benefits of smart meters2. Enabling a market-driven smart meter rollout3. Competitive neutrality4. Privacy of personal information5. Third party and distributor framework