The Clean Energy Legislation (Carbon Tax Repeal) Act 2014 (Cth) (CEL Act) received royal assent on 17 July 2014. The CEL Act repealed the Clean Energy Act 2011 (Cth) and effectively abolished the Carbon Pricing Mechanism (CPM). Companies are now required to pass on savings to consumers resulting from the repeal of the CPM. This article discusses the amendments to the Competition and Consumer Act 2010 (Cth) (CCA) that provide the Australian Competition and Consumer Commission (ACCC) with powers to ensure that this occurs, particularly in relation to gas and electricity prices.

Australian Competition and Consumer Commission powers

As a result of the carbon tax repeal, the ACCC has been given extra powers to monitor electricity retailers and producers, natural gas retailers and bulk synthetic greenhouse gas (SGG) importers (collectively the ‘energy entities’). The ACCC’s extra powers relate to ‘regulated goods’ namely electricity, natural gas, SGG and SGG equipment. The Minister has the power to add to the list of regulated goods. [1]

Under Division 2A – 2C of Part V of the CCA, the energy entities are required to provide information regarding the impact of the repeal of the CPM, namely:  

  • information in response to Carbon Tax Removal Substantiation Notices (Notices)
  • carbon Tax Removal Substantiation Statements (Substantiation Statements)
  • Statements for Customers.

Notices

The Notices require energy entities to explain to the ACCC how the repeal of the CPM affects an entity’s regulated supply input costs and how reduction of these costs as a result of the repeal will be reflected in their prices. [2] The ACCC issued Notices to the energy entities in August 2014.

An energy entity must respond to a Notice. Under Division 2A of Part V of the CCA, the energy entities were required to respond to the Notice within 21 days after receipt, unless an extension was given.[3] A  failure to do so is a criminal offence of strict liability punishable by a fine of $34,000 for a company or $6800 for an individual. [4]

Substantiation Statements

Division 2B of Part V of the CCA states the energy entities must also produce Substantiation Statements to the ACCC within 30 days after royal assent.

A Substantiation Statement must estimate the savings that will be passed on to consumers as a result of the repeal of the CPM during the 2014/2015 financial year and must provide information to substantiate this estimate.[5]

A Substantiation Statement must be published on the energy entity’s website from 18 August 2014 until 30 June 2015.[6]

An energy entity who failed to give the ACCC a Substantiation Statement or who fails to publish it on their website may face a penalty of up $85,000 for a company or $6800 for an individual. [7] This is a criminal offence of strict liability.

Statements for Customers

Division 2C of Part V of the CCA requires electricity retailers and natural gas retailers to issue a Statement for Customers by 15 September 2014.

The Statement for Customers must identify the savings on an average annual percentage price or annual dollar price basis as a result of the carbon tax repeal for the 2014/15 financial year. [8]

Electricity retailers and natural gas retailers who do not comply with this provision may face penalties of up to $68,000. This is a criminal offence of strict liability. [9]

Benefits for consumers

The information that energy providers are required to provide to the ACCC and to their customers in light of changes to the CCA will help to ensure that savings resulting from the repeal of the CPM will be passed on to consumers. Time will tell whether there are, in fact, significant savings to be had.