Stepping up scrutiny on electricity industry with whistleblower tool

Competition is important for a well-functioning economy. It fosters innovation, drives down prices, improves product quality, and boosts overall economic growth. To follow-up on concern about potentially anti-competitive conduct in the energy sector, the Commerce Commission and the Electricity Authority recently met with a group convened by the Auckland Business Chamber. We heard that some electricity buyers are concerned about the potential for retaliation and we also heard about some disturbing business conduct that is potentially in breach of the laws we enforce, particularly the Commerce Act and the Fair Trading Act.

However, subsequent inquiries by the Commission have not yielded enough evidence to warrant a formal investigation.

That’s why we are encouraging anyone with knowledge of unfair or anticompetitive practices to use our Anonymous Reporting Toolopen_in_new. We’ve recently added an option for the Electricity industry. The tool utilises encryption methods so you can securely make a report without disclosing your personal information. Information provided through this channel will help us improve our scrutiny of any anticompetitive conduct in the industry.

The combination of fuel shortages and high demand over last winter pushed wholesale spot prices to record highs and raised fears of de-industrialisation, and our energy sector remains very exposed to climatic conditions. With New Zealanders relying on electricity and gas everyday — for everything from heating their homes and businesses to running industrial processes — this is a pressure point with real consequences.

But let’s be clear —  a tight market does not give license to squeeze customers. Consumers, including businesses that buy services, are entitled to a well-functioning competitive market in which they are treated fairly. From my perspective, fair treatment includes:

• Contract offers being available for reasonable time periods;
• Material terms such as those concerning interruptible supply being priced separately and not bundled into single offer; and
• Absolutely no suggestion that membership of particular industry bodies might lead to more difficult contract negotiations.

If we find electricity suppliers misusing substantial market power to deter competition in these markets, we will take action. Likewise, we will take a close interest in any potential breaches of the Fair Trading Act in this sector.

The energy sector should be a major strength for New Zealand, powering up our economy rather than the headwind it currently presents. In association with our colleagues at the Electricity Authority, the Commerce Commission is committed to playing our part in turning this sector around.

While we are working on this longer-term problem, we also need good quality information to address today’s issues, so we encourage anyone with actionable information to use our Anonymous Reporting Toolopen_in_new.

This piece was originally published in Energy Newsopen_in_new.