PIAC lodged a submission to the AER’s discussion paper on its approach to its new role in Wholesale Market Performance Monitoring. PIAC strongly supports the AER’s monitoring of wholesale markets. In PIAC’s view, an essential outcome of this is to not only provide an independent assessment of the performance of wholesale markets but also for the AER to propose policy, regulatory or procedural reforms to the COAG Energy Council and other market institutions.
PIAC appreciates the complexity of assessing the efficiency and effectiveness of wholesale markets given the various products and services involved, all of which contribute to the cost that is ultimately passed on to consumers. PIAC supports the AER having flexibility and using its discretion to analyse wholesale markets and market behaviour as required, and encourages the AER to approach it tasks and role as an expert regulator rather than a legal regulator. In the context of the wholesale energy market, this would entail the AER using its full discretion in whatever ways would assist it give primacy to the National Electricity Objective. To this end, PIAC also supports the AER taking a proactive monitoring role that identifies potentially inefficient market outcomes at the earliest opportunity. Given the transition currently underway in the NEM, PIAC also supports measures which may help to future-proof the AER’s market monitoring role, noting that new markets, participant behaviours and potential consumer harms are likely to emerge in response to policy reforms and technological changes.