Independent report casts doubt over Thwaites Review

An independent expert report casts doubt over the analysis attached to the Thwaites Review of Retail Markets in Victoria, the energy industry said today.

The Thwaites Review investigated the operation of the electricity and gas markets in Victoria. Its report was released in August.

Australian Energy Council General Manager Corporate Affairs, Sarah McNamara, said in proposing the re-regulation of the retail electricity market, the Thwaites Review relied heavily on analysis provided by Carbon and Energy Markets (CME) of the gross margins that are likely being achieved. 

“This new report suggests the CME analysis of retail margins of in excess of $400 per customer in Victoria is flawed because of:

• Questionable choices in the methodological approach used;
• Factual errors in its calculations; and,
• A preference to ignore publicly available data and rely instead on analytical assumptions.

“The new report by consultants Oakley Greenwood was released today by the Australian Energy Council. It found the CME analysis of retail margins is likely to be out by a factor of at least 30%,” Ms McNamara said.

"The industry accepts that more needs to be done to engage with customers and make energy bills easier to understand – that’s why the industry supports many of the recommendations of the Thwaites Report.”

Ms McNamara said a decision to re-regulate the market will have far-reaching unintended consequences and these have not been assessed. 

"The Victorian government can’t fix rising wholesale prices by regulating retail markets. Those increases will not be stopped until we have stable national energy and climate policy which will enable investment in new generation.

“If the Government does determine that it wants to re-regulate the electricity industry it should do so on the basis of robust data and following a comprehensive consultation with industry and community stakeholders to determine the best method to deliver a re-regulation. Victorian consumers are owed that consideration.”

About the Australian Energy Council

The Council represents 21 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.