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ACCC 2022 In Review | Energy

By Peter Limbers, Alena Stirton

• 09 February 2023 • 11 min read
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In 2021, the energy sector boasted falling electricity prices and gas supply meeting demand. However, 2022 has presented challenges to the energy sector felt by both retailers and consumers. These changes include higher gas and coal prices, reduced generator availability and the continuing transition towards a net-zero future. Given that these factors are outside the control of the ACCC, other than enforcing Part IV or the energy-specific Parts of the CCA, the ACCC is limited primarily, to a monitoring role.

Rising electricity and gas prices and falling gas supply


The ACCC’s Inquiry into the National Electricity Market was finalised in November 2022 and found that consistently higher electricity spot prices have increased retailers’ costs to supply electricity to their customers. This has resulted in more expensive electricity plans and higher electricity bills. The ACCC identified that between April and October 2022, the median annual bill of an Australian resident increased by 23%. The drivers of high prices, high gas and coal prices, reduced generator availability and the continuing transition towards a net-zero future are likely to continue into 2023 and cannot be resolved by the ACCC.


The ACCC identified in its Gas Inquiry 2017-2025 Interim Report (finalised in July 2022) that gas prices in Australia’s spot market have been increasing since March 2022. The cumulative effect of cold weather, the frequency of planned and unplanned electricity generator outages and coal and gas being traded at high prices in overseas markets was identified by the ACCC to have caused this increase. As a result, administered price caps were introduced by AEMO (Australian Energy Market Operator) into Sydney, Brisbane and Victoria’s markets for periods of time in 2022. These price caps are designed to protect market participants from sustained periods of high spot prices in those markets. The higher spot prices that led to the introduction of the administered price caps have led the ACCC to express concern that prices under long-term gas sales agreements in Australia’s east coast gas market will increase.

The ACCC also reported that most of the excess gas that Australian liquified natural gas (LNG) exporters produced in 2022 was sold in international spot markets. This concerned the ACCC because the 2021 Heads of Agreement between the Commonwealth Government and the LNG exporters required LNG exporters to offer to sell excess gas to the domestic market before selling it overseas having regard to the LNG netback price (which is a measure of export parity price that a gas supplier can expect to receive for exporting its gas). Ms Cass-Gottlieb noted this issue in August, commenting,

“We are strongly encouraging LNG exporters to immediately increase their supply into the market.”

In light of the ACCC’s projected gas shortfall in 2023 and the expiry of the 2021 Heads of Agreement on 1 January 2023, the Commonwealth Government has entered into a new Heads of Agreement with LNG exporters, which includes:

  • LNG exporters to first offer uncontracted gas to the domestic market, on competitive terms, with reasonable notice, before exporting
  • in respect of uncontracted gas, the principle that domestic gas customers will not pay more for the LNG exporters’ gas than international customers
  • commitments by LNG exporters to offering gas on terms consistent with a code of conduct
  • enhanced transparency and accountability, with quarterly compliance reporting to the Minister for Resources, with oversight by the competition regulator, the ACCC.

The Federal Government has also recently passed legislative reforms to apply a temporary price cap on uncontracted gas offered on the wholesale market from currently operational gas fields and the development of a mandatory code with the ACCC responsible for enforcement. These measures by the Federal Government may result in lower gas prices over the next year than would otherwise have been the case.

Volatility of the energy sector

The ACCC and the Australian Energy Regulator’s (AER) recent annual report (2021-22) emphasised the high volatility of wholesale electricity spot prices throughout this year. AER Chair Clare Savage noted that the combination of high gas and coal prices, high demand for electricity and reduced generator availability put a strain on the National Electricity Market, which is only designed to handle temporary volatility. Volatility reached a boiling point in June 2022, which led to AEMO suspending the National Electricity Market (NEM) for nine days. Although AEMO has previously suspended the spot market in specific States, this was the first time that the spot market was suspended in all interconnected regions of the NEM simultaneously.

Following the temporary suspension of the NEM, the AEMO’s Quarterly Energy Dynamics Q3 2022 Report revealed the remarkable volatility seen in the third quarter of 2022including:

  • Normally, Q3 is not a volatile period, with no more than 1% of trading intervals recording prices above $300/MWh. However, in Q3 of 2022, 24% of intervals had prices exceeding $300/MWh.
  • In July specifically, 61% of intervals had prices exceeding $300/MWh, which is the highest recorded monthly volatility since the inception of the NEM
  • In July, there were several ‘extreme price events’ where prices soared above $1000/MWh in Queensland.

The ACCC noted in its ‘Inquiry into the National Electricity Market’ report (published in November 2022) that the factors propagating increased volatility are likely to continue. As such, it will be more important than ever for retailers to purchase financial contracts that will help mitigate the impacts of highly volatile electricity prices.

The Federal Government’s proposed gas market reforms may reduce electricity prices volatility.

Retail competition under pressure

The ACCC has observed an increase in retail competition for the sale of electricity in the past decade. However, the ACCC has identified that the financial viability of some retailers has been reduced, or eliminated entirely, due to the cumulative effects of high and volatile electricity spot prices, more limited access to hedging contracts and limits on what costs retailers can pass on to customers. Since May 2022, six electricity retailers have exited the Australian east coast retail electricity market. By comparison, one retailer exited the market between 2016 and 2019. AER Chair Clare Savage observed that,

The market volatility seen in the later part of 2021–22 highlighted the need for consumer protections, with an increase in energy retailers closing their doors.

The ACCC revealed that the average margin that retailers have been able to make per customer has decreased by 33% from 2021 to 2022, now being only $35 per customer. This conforms to the pattern of decreasing retail margins observed by the ACCC since 2016-17.

The ACCC has observed that retailers have traditionally limited their exposure to slightly higher or more volatile spot market prices by purchasing financial contracts. However, as market participants in 2022 have expected increases in price and volatility, the price of financial contracts has followed suit. For example, the average price paid for base swap products increased by 119% from 2021 to 2022. The ACCC stated that the combination of reduced margins and high contract prices had forced some smaller retailers out of the exchange-traded contract market. The inability to mitigate risks this way leaves small retailers more vulnerable to high and volatile prices and financial unviability. The ACCC has warned that the closing of smaller retailers will ultimately lead to reduced competition, fewer options for customers and higher household bills.

Key enforcement activity

Pricing and selling of energy

The ACCC pursued several measures in 2022 to address its enforcement priority to regulate competition and consumer issues catalysed by how essential services are priced and sold.

  • Penalties issued for illegal pricing advertisements: In January, the ACCC announced that energy retailer CovaU Pty Ltd was ordered to pay $33,300 in penalties for failing to publish the percentage difference between three of their plans and the Default Market Offer. Without displaying this percentage, it is difficult for customers to compare plans and get the best deal on electricity. This prosecution directly addressed the ACCC’s goal of regulating the pricing and sale of energy.
  • Approving joint marketing arrangements for the Mereenie gas field: In January, the ACCC issued a determination giving the four joint venture partners of the Mereenie gas field permission to jointly market gas produced by the Mereenie gas field. While such a determination is not usually granted, the public benefit of encouraging investment into gas production, leading to more gas being supplied quickly to the Australian market, likely outweighed any public harm in the view of the ACCC. However, the impact of this determination on the east coast gas market is likely to be minimal, given that the ACCC identified that the Mereenie gas field accounts for less than 1% of gas supplied to this market.
  • Informing energy retailers of their pricing obligations: In June 2022, Ms Cass-Gottlieb stated that,
“Working jointly with the AER, we have written to energy retailers to remind them of their obligations concerning electricity prices under the Competition and Consumer Act and the National Electricity Retail Code.”
  • Granting interim authorisations to support the supply of electricity: In July 2022, the ACCC granted interim authorisation for electricity and gas market participants to collaborate in efforts to reduce outages and ensure the NEM operates reliably. In November 2022, the ACCC made a final determination granting authorisation until 30 April 2023 for market participants to collaborate to ensure Australia’s energy systems operate reliably.
  • Providing advice to the Federal Government: In or around June 2022, the ACCC was directed by the Federal Government to investigate the factors that impacted the electricity and gas prices, profits and margins of several energy corporations. The ACCC was also asked to determine if regulatory reform was required to ensure that Australia’s electricity and gas markets operated correctly. Since this advice, in December, the Federal Government announced and passed legislation amending the CCA to provide for an emergency pricing order that will impose a 12-month cap on the price of uncontracted gas offered to the wholesale market from currently operational fields. Additionally, the reforms provide for the introduction of a mandatory code of conduct for the wholesale gas market to require wholesale gas to be offered at affordable prices for domestic customers while maintaining a reasonable return for suppliers and incentives for investment.


The second, and final, ACCC enforcement priority on the energy sector centred on investigations into false environmental and sustainability claims. In a press release in October 2022, then ACCC Deputy Chair, Ms Delia Rickard, commented,

“As consumers become increasingly interested in purchasing sustainable products, there are growing concerns that some businesses are falsely promoting their environmental or green credentials. Misleading claims about products or services undermine consumer trust and confidence in the market.”

In October, the ACCC launched two “internet sweeps” designed in part to locate misleading environmental and sustainability advertising. The results of these sweeps have not yet been publicised. Consequently, we are very confident that this enforcement priority will extend into 2023 and be an ongoing focus for the ACCC this year – and possibly next. We discuss Greenwashing in further detail in the Consumer Protection section of this report.

In 2023, the ACCC will continue monitoring competition and consumer issues in the energy markets. In addition, the ACCC’s inquiries into electricity prices and profits and gas supply and demand will continue to be consistent with their respective terms of reference.

In its Gas Inquiry 2017–2025 Interim Report, the ACCC predicted a 10% shortfall of gas supply in the east coast market in 2023 if the liquified natural gas exporters, who produce the majority of the gas on the east coast of Australia, sell all of the excess gas they produce to international markets. In 2024, the Federal Government will take steps to implement the ACCC’s advice. The Hon. Ed Husic MP, Minister for Industry Science and Technology, has announced that the Federal Government will be consulting with industry stakeholders about the 12-month price cap on new domestic wholesale gas sales by east coast producers and the mandatory gas code of conduct. With these interventions, the Treasury Department predicts that retail gas prices will increase by 18% until July 2023 and then by only 4% in the 2023-34 financial year. In December, the Minister also announced that the Federal Government has allocated an additional $12.5 million to the ACCC to monitor gas markets, implement a mechanism to allow the government to intervene if a gas shortfall occurs, and enforce a code of conduct designed to promote reasonable gas prices.

In electricity markets, the transition towards a net-zero future, including the new Federal Government’s climate policies, when combined with other factors such as higher gas and coal prices, may result in ongoing issues, including price increases and volatility.

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