Market Development
Competition in the electricity and gas retail markets has been introduced in South Australia in a staged manner, beginning in late 1998 when large industrial and commercial customers were able to choose their energy retailers, to the introduction of full retail contestability (FRC) in the small customer segment in electricity in January 2003 and gas in July 2004. Until 2006, when the Commission ceased its activities in this area in anticipation of the Australian Energy Market Commission’s review into the effectiveness of competition in Australia, the Commission monitored the on-going development of FRC in the South Australian energy retail market based on seven key indicators encompassing both retailer-related and consumer-related developments.
Full Retail Contestability
Competition in the electricity and gas retail markets has been introduced in South Australia in a staged manner, beginning in late 1998 when large industrial and commercial customers were able to choose their energy retailers, to the introduction of full retail contestability (FRC) in the small customer segment in electricity in January 2003 and gas in July 2004.
During 2003 and 2004, consultation occurred on a number of papers reviewing how best to monitor the development of electricity and gas (energy) FRC in South Australia, which culminated in the release of the Final Decision Paper ("Monitoring the Development of Energy Retail Competition in South Australia, Final Decision") in September 2004. This Final Decision Paper provides an integrated framework for monitoring the development of competition in the South Australian electricity and gas (energy) retail markets in the future.
Until 2006, when the Commission ceased its activities in this area in anticipation of the Australian Energy Market Commission’s review into the effectiveness of competition in South Australia, the Commission monitored the on-going development of FRC in the South Australian energy retail market based on the seven key indicators, canvassed in the Final Decision paper, encompassing both retailer-related and consumer-related developments, namely:
Indicator 1 - Number of Energy Retailers;
Indicator 2 - Customer Switching;
Indicator 3 - Barriers to Entry;
Indicator 4 - Information Asymmetries;
Indicator 5 - Price/Service Mix;
Indicator 6 - Impacts on Low-Income Groups; and
Indicator 7 - Innovation.
The monitoring of the development of the electricity and gas retail markets is reported through the Commission's Annual Performance Reports and its six-monthly Statistical Reports.
This work is consistent with the primary objective of the Commission under the Essential Services Commission Act 2002, being the protection of the long-term interests of South Australian consumers with respect to the price, quality and reliability of essential services. Responsibility for the implementation of FRC rested largely with the Government and the electricity and gas industries. It is the role of the Commission to ensure that consumers are effectively able to exercise choice and therefore benefit from competition.
