SEQ retail electricity market monitoring: January to March 2019

SEQ retail electricity market monitoring: January to March 2019
Market Monitoring Report


SEQ retail electricity market
monitoring: January to March
2019
April 2019
SEQ retail electricity market monitoring: January to March 2019
© Queensland Competition Authority 2019
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Queensland Competition Authority                                     Contents




Contents

THE ROLE OF THE QCA – TASK, TIMING AND CONTACTS                            II

1          INTRODUCTION                                                    1
1.1        Minister's direction notice                                     1
1.2        QCA methodology                                                 1

2          PRICE MONITORING                                                4
2.1        Residential customers (tariff 11)                               4
2.2        Small business customers (tariff 20)                            9
2.3        Conclusion                                                     12

GLOSSARY                                                                  14

APPENDIX A: MINISTER'S LETTER AND DIRECTION NOTICE                        15

APPENDIX B: ASSUMPTIONS AND ADDITIONAL INFORMATION                        18
Offers available in the March quarter                                     18
Other incentives and benefits                                             18
Assigning the total value of sign-up incentives to the bill               18
Residential offers available to small business customers                  18
Calculating bills using our published dataset                             19

APPENDIX C: WEIGHTED BILLS                                                20
Minister's direction notice                                               20
Data availability                                                         20
Weighted bills for the September and the December quarters of 2018        20




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Queensland Competition Authority                                       The Role of the QCA – Task, Timing and Contacts




THE ROLE OF THE QCA – TASK, TIMING AND CONTACTS

The Queensland Competition Authority (QCA) is an independent statutory body which promotes
competition as the basis for enhancing efficiency and growth in the Queensland economy.

QCA market monitoring functions
The QCA's role with respect to monitoring the south east Queensland (SEQ) retail electricity market (the
market) is set out in part 2, chapter 4 of the Electricity Act 1994 (Qld) (the Electricity Act). In accordance
with section 89B of the Electricity Act, the QCA has been directed by the Minister for Natural Resources,
Mines and Energy to report on the operation of the market for the period 1 July 2018 to 30 June 2019.
The direction notice continues the quarterly reports that the QCA provided for the period 1 October 2017
to 30 June 2018.

Contacts
Enquiries regarding this project should be directed to:
Attention:     Mr Shannon Murphy
Contact:       www.qca.org.au/contact-us




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Queensland Competition Authority                                                                   Introduction




1          INTRODUCTION

1.1        Minister's direction notice
           The Minister for Natural Resources, Mines and Energy has directed the Queensland Competition
           Authority (QCA) to monitor prices for residential and small business electricity customers in
           south east Queensland (SEQ). The direction notice applies to the period from 1 July 2018 to 30
           June 2019, with the QCA required to report on each three-month period. The direction notice
           continues the quarterly reports that the QCA published for the period 1 October 2017 to 30
           June 2018 under a separate direction notice.
           The tariffs that the QCA reports on are equivalent to the standard tariffs regulated by the QCA
           in regional Queensland, which are tariff 11 (residential) and tariff 20 (small business). The
           Minister's letter and direction notice are at Appendix A.

1.2        QCA methodology
           Typical SEQ customer
           We have used substantially the same methodology for this report as when we monitored prices
           in the SEQ retail electricity market for the 2016–17 and 2017–18 financial years, and the first
           two quarters of 2018–19. That is, we present prices as a bill (GST included) for a median
           consumption level customer—the 'typical SEQ customer'—to provide the most meaningful
           comparison between individual price components.1
           The median consumption levels we used to calculate typical quarterly bills were 1,000 kilowatt
           hours for residential flat rate customers, and 1,561 kilowatt hours for small business flat rate
           customers. The levels were derived by multiplying daily Energex consumption volumes by 90
           days (1 January to 31 March 2019). As this report relates only to the March quarter of 2019, the
           bills are reported per quarter, not for a year.
           Readers should also note that some figures in this report do not add due to rounding.

           Standing and market offers
           We present quarterly bills for standing and market offers, based on the offers published on
           Energy Made Easy in the March quarter of 2019.
            Standing offers are basic offers with terms and conditions that are specified by the National
             Energy Retail Rules (NERR).2
            Market offers contain a minimum set of terms and conditions (specified in the NERR) and
             can include other terms and conditions agreed between the retailer and customer.3
           Compared to market offers, standing offers provide preferential terms and conditions to
           customers. In our view, standing and market offers should therefore not be compared solely in
           terms of price differences.4



1
  For more information on our methodology, see QCA 2019, SEQ retail electricity market monitoring: 2017–18,
   updated market monitoring report, March (pages 4–6).
2
  National Energy Retail Rules, rule 12 and schedule 1.
3
  National Energy Retail Rules, rule 14.


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Queensland Competition Authority                                                                        Introduction




           Weighted average bills
           In addition to simple average bills, we include weighted average bills by retailer market share
           for standing and market offers, using market shares from the previous quarter, as outlined in
           the direction notice. We used the AER's data on the performance of the retail energy market to
           calculate the retailers' market shares. Due to the timing of our quarterly SEQ market monitoring
           reports, AER data for the same quarter is not available when we publish our reports.
           The AER dataset contains the number of 'residential customers' and 'small business customers'
           by retailer and by quarter, split into total customer numbers and the number of customers on
           market contracts. However, the data does not provide information on the number of customers
           by tariff type, nor how many customers are contracted to particular electricity offers/plans. The
           weighted average bills should therefore only be interpreted as a proxy for the uptake of offers.5

           Energy Made Easy
           We obtained information on retailers' standing and market offer prices in the March quarter of
           2019—including supply and usage charges—from Energy Made Easy on 31 March 2019.
           Some retailers' higher priced market offers may have been for solar customers only. As retailers
           continue not to apply a common approach to identifying solar-only offers on Energy Made Easy,
           we did not remove any market offers with feed-in tariffs from our analysis. In our solar feed-in
           tariff monitoring report for 2017–18, we commented that the comparability of offers on Energy
           Made Easy would improve if retailers published separate solar and non-solar offers on Energy
           Made Easy, and included solar metering charges in the supply charges of their solar offers.6
           We continue to hold the view that the comparability of offers on Energy Made Easy would also
           be improved if all retailers:
            applied a consistent approach to publishing offers with controlled load tariffs
            published separate offers for controlled load tariffs
            added controlled load metering charges to the supply charges of their controlled load offers.
           Finally, as the bills in this report are calculated using prices in retailers' offers on Energy Made
           Easy, the bills do not reflect the actual electricity bills customers in SEQ paid during the March
           quarter.7




4
  For more information on the QCA's analysis of the difference between standing and market offer prices, see
   QCA 2018, Regulated retail electricity prices for 2018–19, final determination, May (page 57).
5
  The Click Energy retail brand is owned by Amaysim Energy. The AER does not report on customer numbers for
   Click Energy; for the purpose of calculating weighted bills, we have apportioned half of Amaysim Energy's
   customers to Amaysim Energy, and half to Click Energy. In calculating each retailer's market share, we also do
   not include customer numbers for retailers who did not have offers published on Energy Made Easy in the
   respective quarter.
6
  QCA 2018, Solar feed-in tariff report 2017–18, monitoring report, October (page 21).
7
  Further discussion of this aspect of retail electricity price monitoring, including other regulators' approaches,
   is available in QCA 2018, submission to the ACCC, ACCC monitoring of the electricity supply in the National
   Electricity Market, December (pages 2–6).


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Queensland Competition Authority                                                               Introduction




           Public dataset
           The tables and graphs in Chapter 2 are supplemented with a dataset, including supply and usage
           charges for each standing and market offer, for the residential and small business flat rate
           tariffs for the March quarter of 2019. This dataset is available as a separate downloadable
           spreadsheet (on our website) for stakeholders seeking more detail.
           Customers can use the dataset to calculate and compare bills based on their actual quarterly
           consumption. The dataset also allows customers to account for seasonal changes in their
           consumption, such as higher demand in summer months, or a generally higher/lower average
           consumption level. Customers with rooftop solar who wish to use the dataset to calculate and
           compare bills should also take into account solar feed-in tariffs. Instructions on using the
           dataset to calculate bills are at Appendix B.




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Queensland Competition Authority                                                                         Price monitoring




2          PRICE MONITORING

2.1        Residential customers (tariff 11)
           In the March quarter of 2019, 24 retailers had offers available for the residential flat rate tariff
           on Energy Made Easy. Of these retailers, 21 had standing offers and 20 had at least one market
           offer for the residential flat rate tariff on Energy Made Easy.
           Table 1      Bills for a typical residential flat rate customer, January to March 2019
                       Retailer           Standing offer          Average            Lowest               Highest
                                               ($)             market offer ($)   market offer ($)     market offer ($)
             1st Energy                        432                   344                335                  355
             AGL                               379                   323                293                  379
             Alinta Energy                     378                   314                300                  329
             Amaysim Energy                    412                   335                305                  358
             Click Energy                      412                   362                288                  412
             DC Power                           —                    408                408                  408
             Diamond Energy                    369                   332                332                  332
             Dodo Power & Gas                  424                   332                332                  332
             Energy Locals                     383                   348                318                  376
             EnergyAustralia                   393                   324                303                  343
             Locality Planning Energy           —                    356                310                  402
             Lumo Energy                       375                   —                   —                    —
             Mojo Power                        453                   408                393                  423
             Momentum Energy                   366                   —                   —                    —
             Origin Energy                     378                   339                303                  378
             People Energy                     360                   —                   —                    —
             Powerclub                         423                   333                322                  344
             Powerdirect                       379                   306                306                  306
             Powershop                         350                   307                298                  316
             QEnergy                           501                   308                303                  317
             ReAmped Energy                     —                    295                295                  295
             Red Energy                        375                   344                328                  364
             Sanctuary Energy                  396                   —                   —                    —
             Simply Energy                     372                   322                297                  343
             Simple average                    396                   337                318                  355
             Weighted average                  378                   331                301                  367
           Note: A dash (—) shows the retailer did not have a residential flat rate standing/market offer published on
           Energy Made Easy in the March quarter. Powerclub's market offer bills include its fee of $40 per 1,000 kWh of
           annual consumption for access to wholesale rates; we assume this fee includes GST.
           Sources: Energy Made Easy; QCA analysis.




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Queensland Competition Authority                                                                           Price monitoring




             The direction notice requires the QCA to include a bill for a regional Queensland customer of
             similar class on a standard retail contract in this report. The equivalent bill for notified prices for
             the March quarter of 2019 is $376 (GST included). This is calculated by:
              multiplying the notified supply charge for 2018–19 (98.422 cents per day (GST excluded),
               including metering charge) by 90 days; and then
              adding the multiple of the notified usage charge for 2018–19 (25.298 cents per kilowatt hour
               (GST excluded)) and 1,000 kilowatt hours, before adding GST to the total amount.8
             Figure 1 Bills for a typical residential flat rate customer, January to March 2019

               $525
               $500
               $475
               $450
               $425
               $400
               $375
               $350
               $325
               $300
               $275




                      Lowest market offer         Highest market offer           Notified price        Standing offer


             Notes: DC Power, Locality Planning Energy and ReAmped Energy did not have a residential flat rate standing
             offer published on Energy Made Easy in the March quarter. Lumo Energy, Momentum Energy, People Energy and
             Sanctuary Energy did not have a residential flat rate market offer published on Energy Made Easy in the March
             quarter.
             Sources: Energy Made Easy; QCA analysis.

2.1.1        QCA assessment
             SEQ offers
             Standing and market offer bills
             Based on the offers published in the March quarter, retailers' standing offer bills were generally
             higher than their market offer bills. For a typical residential customer:
              standing offer bills ranged from $350 (Powershop) to $501 (QEnergy)
              market offer bills ranged from $288 (Click Energy) to $423 (Mojo Power).
             The lowest market offer available in the market in the March quarter was Click Energy's Saturn
             offer ($288). The Saturn offer did not have the lowest supply or usage charges in the market;
             the conditional 30 per cent discount (off the total bill) when email bills are paid by due date and
             the account is not in credit made it the cheapest offer. The offer was available from 22 January
             2019.




8
    QCA 2018, Regulated retail electricity prices for 2018–19, final determination, May (page 76, table 21).


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Queensland Competition Authority                                                                                   Price monitoring




           Residential customers on standing offers could generally have reduced their bills in the March
           quarter by switching to a market offer. For example, by switching from the highest standing
           offer to the lowest market offer, they could have reduced their bill by $213 (or 42 per cent).
           Customers on market offers also had the opportunity to save up to $135 (or 32 per cent) on
           electricity bills by switching to the lowest market offer.
           Other incentives and benefits
           Nine retailers attached incentives or benefits to at least one of their residential flat rate market
           offers in the March quarter.
           Table 2      Other incentives and benefits attached to residential flat rate market offers, January
                        to March 2019
                   Retailer                                       Other incentives and benefits
             AGL                   Online sign-up credit: $25 credit on the first bill when signing up online (Residential
                                   Essentials offer available from 19 October 2018 to 14 January 2019).
                                   Bonus credit: $20 credit every six months, up to $80 over two years (Residential Essentials
                                   Plus offer available from 1 March 2019).
                                   Bonus credit: $25 credit every six months, up to $100 over two years (Residential
                                   Essentials Plus offer available from 14 January to 1 March 2019).
                                   Online sign-up credit: $50 credit on the first bill when signing up online (Residential Solar
                                   Savers offers available from 31 July 2018).
                                   Online sign-up benefit: Amazon Echo Dot (3rd Gen) device when signing up online, limited
                                   to one per supply address during any 12-month period (Residential Savers Home Connect
                                   offers available from 5 December 2018). AGL stated on the offer that the recommended
                                   retail price of the device was $79.
             Amaysim               Online sign-up credit: $100 credit ($50 on the first bill and $50 on the first bill after 12
             Energy                months) when signing up online with an eligible promocode or by calling and mentioning
                                   the offer (Electricity 2 and Solar 2 offers available from 30 August 2018 to 4 January
                                   2019).
                                   Sign-up credit: $25 credit on the first four (monthly) bills (total value of $100) with an
                                   eligible promocode (Electricity 2 and Solar 2 offers available from 14 September 2018 to 4
                                   January 2019).
             Click Energy          Online sign-up credit: $50 credit ($25 on the first bill and $25 on the first bill after 12
                                   months) when signing up online with an eligible promocode (Amethyst, Green, Sun, Sun
                                   Bright and Sun Light offers available from 3 December 2018 to 4 January 2019 and from
                                   22 February 2019).
             Dodo Power &          General incentive: From time to time, Dodo Power & Gas may provide promotional offers
             Gas                   (including one-off payments and/or products) though promotion codes, which may be
                                   redeemed when signing up. These codes do not change the rates, fees or charges of the
                                   offer (Residential Market offer available from 27 July 2018).
             EnergyAustralia       Online sign-up credit: $50 credit on the first bill when signing up online (Anytime Saver
                                   (Home) offers available from 30 August 2018).
                                   Velocity points: 2,000 Velocity points at each continuous 12-month anniversary of joining,
                                   provided the customer stays on the plan and satisfies the eligibility criteria, plus 5,000
                                   bonus Velocity points when signing up and agreeing to receive bills and correspondence
                                   by email (Velocity Anytime Saver offers available from 31 August 2018).
             Mojo Power            Mojo credit: $480 worth of Mojo Points via 12 bill credits of $40 per month (EnergyPass
                                   offers available from 20 September 2018).(a)
             Origin Energy         Sign-up credit: $100 credit on the first bill after a customer moves (Origin Supply—Online
                                   Move offers available from 17 September 2018 to 11 January 2019).
                                   Sign-up credit: $200 credit applied on the first bill after three months when signing up
                                   online (Origin Supply—Online Move offer available from 20 February 2019).
                                   Sign-up benefit: Origin Home HQ Energy Starter Kit, limited to one per supply address
                                   during any 24-month period (Origin Smart Saver offer available from 10 January 2019).


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Queensland Competition Authority                                                                                   Price monitoring




                 Retailer                                         Other incentives and benefits
                                   Origin stated that access to its Home HQ service may be deactivated if customers cancel
                                   their plan within six months of the supply start date and the Home HQ Energy Starter Kit
                                   may have to be returned.
             Red Energy            Qantas points: 10,000 bonus Qantas points once Red Energy supplies energy and
                                   additional Qantas points per $1 on the bill when paying in full, available to new
                                   customers only (2 points on the Qantas Red Saver—Qantas Business Rewards, available
                                   from 21 January 2019, and 7 points on the Qantas Red Plus—Qantas Business Rewards,
                                   available from 12 February 2019).
                                   Qantas points: 10,000 bonus Qantas points once Red Energy supplies energy and
                                   additional Qantas points per $1 on the bill when paying on time, available to new
                                   customers only (2 points on the Qantas Red Saver offer, available from 1 November 2018
                                   to 20 January 2019, and the Qantas Red Saver—Qantas Frequent Flyer offer, available
                                   from 21 January 2019; 3 points on the Qantas Red Saver (Bundled) offer, available from
                                   21 January 2019; 7 points on the Qantas Red Plus offer, available from 1 November 2018
                                   to 12 February 2019, and the Qantas Red Plus—Qantas Frequent Flyer offer, available
                                   from 12 February 2019; and 8 points on the Qantas Red Plus (Bundled) offer, available
                                   from 21 January 2019).
             Simply Energy         Online sign-up credit: $50 credit on the first bill when signing up online (Plus 18 Online,
                                   RACQ Plus 21 Online (available to current RACQ members), AFL Plus 10 Online, Movies
                                   Plus 10 Online and Save 10 Online offers available from 10 October 2018).
                                   Movie tickets: One Gold Class or two Event Cinema movie tickets every three months
                                   during the benefit period of two years (Movies Plus 10, Movies Plus 10 Online and Movies
                                   Plus 10 FIT offers available from 10 October 2018).
                                   Monthly credit (AFL free kick): $10 credit every month, up to $240 over two years (AFL
                                   Plus 10 (available to new customers only), AFL Plus 10 Online and AFL Plus 10 FIT offers
                                   available from 10 October 2018).
            (a) Mojo Power listed the Mojo Points as a discount, rather than an incentive, on Energy Made Easy.
            Notes: 1st Energy, Alinta Energy, DC Power, Diamond Energy, Energy Locals, Locality Planning Energy,
            Powerclub, Powerdirect, Powershop, QEnergy and ReAmped Energy did not attach any other incentives or
            benefits to their residential flat rate market offer(s) in the March quarter. Powerclub listed an 'access to
            wholesale rates' incentive on its offers whereby, to participate in the wholesale market, a customer must make a
            minimum one-off, refundable (at its value at time of exit) contribution to the customer's Powerbank of $40 per
            1,000 kWh of annual consumption. However, we consider that this aspect of Powerclub's offers should be
            included as a fee type, not an incentive, on Energy Made Easy. Where a retailer offered an incentive or benefit, it
            did not necessarily attach the incentive or benefit to all of its residential flat rate market offers. With the
            exception of Simply Energy—who stated on Energy Made Easy that incentives are applied to bills before GST—
            retailers' incentives are reported as, or are assumed to be, GST inclusive.
            Source: Energy Made Easy.

            In our recent quarterly reports, we have highlighted the increase in the number of retailers
            attaching incentives and benefits to their residential market offers. We have also commented
            that the increase provided customers with a wider range of options to choose from when
            reviewing offers, but created a new element of complexity for customers. When customers
            analyse the value of an incentive, they also need to bear in mind that eligibility criteria and
            terms and conditions may be attached to accessing the incentive—such as forfeiting incentives
            if they switch to another retailer, or it being available to new customers only.
            In this context, we agree with the advice, on the Australian Government's new 'powering
            forward' energy website, that customers should call their retailer often, and certainly every year
            and/or when their circumstances change, to find the best offer.9




9
    https://poweringforward.energy.gov.au/.


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Queensland Competition Authority                                                                                Price monitoring




           SEQ offers and notified prices
           In the March quarter, each retailer (except DC Power and Mojo Power) that had market offers
           on Energy Made Easy had at least one market offer that was lower than the equivalent bill
           under notified prices in regional Queensland. Fourteen retailers' standing offers yielded
           quarterly bills that were higher than the equivalent bills for notified prices, while seven yielded
           lower bills.

           Quarterly changes in lowest market offer bill
           The table below shows the quarterly changes, in percentage terms, in retailers' lowest market
           offers compared to the June, September and December quarters of 2018.
           Table 3      Quarterly changes in lowest market offer bill for a typical residential flat rate
                        customer, 2018–19
                       Retailer               June quarter to            September quarter to          December quarter to
                                           September quarter (%)         December quarter (%)           March quarter (%)
             1st Energy                             –1.0                           0.0                          0.0
             AGL                                    +0.6                          +1.6                         –2.1
             Alinta Energy                          –1.4                           0.0                          0.0
             Amaysim Energy                         –12.9                         +4.2                          0.0
             Click Energy                           –19.2                          0.0                          0.0
             DC Power                                n/a                          n/a                           n/a
             Diamond Energy                          n/a                           0.0                          0.0
             Dodo Power & Gas                         0.0                          0.0                          0.0
             Energy Locals                          –9.4                           0.0                          0.0
             EnergyAustralia                        –3.5                           0.0                          0.0
             Locality Planning Energy                n/a                          n/a                           n/a
             Mojo Power                             –15.7                        +18.5                          0.0
             Origin Energy                          +1.6                          –8.8                          0.0
             Powerclub                               n/a                          n/a                           n/a
             Powerdirect                            –11.4                          0.0                          0.0
             Powershop                              –9.5                           0.0                          0.0
             QEnergy                                –2.5                           0.0                         +2.0
             ReAmped Energy                          n/a                          n/a                           n/a
             Red Energy                               0.0                          0.0                         +3.1
             Simply Energy                          –5.2                           0.0                          0.0
           n/a: The retailers did not have a residential flat rate market offer published on Energy Made Easy in the
           preceding quarter.
           Note: Quarterly changes are based on retailers' annual bills, as the four quarters vary in length (90 to 92 days).
           Sources: Energy Made Easy; QCA analysis.

           The table shows that for a typical SEQ customer, the lowest offers of 13 retailers remained
           unchanged in the March quarter, while two retailers' lowest offers became more expensive.
           Only AGL's lowest market offer was cheaper in the March quarter than its lowest market offer
           in the December quarter.




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Queensland Competition Authority                                                                            Price monitoring




2.2          Small business customers (tariff 20)
             In the March quarter of 2019, 18 retailers had offers available for the small business flat rate
             tariff on Energy Made Easy. Of these retailers, 17 had standing offers and 17 had at least one
             market offer for the small business flat rate tariff on Energy Made Easy.
             Table 4     Bills for a typical small business flat rate customer, January to March 2019
                        Retailer            Standing offer          Average             Lowest               Highest
                                                 ($)             market offer ($)    market offer ($)     market offer ($)
              1st Energy                         685                   508                 508                  508
              AGL                                609                   548                 475                  609
              Alinta Energy                      590                   501                 498                  504
              Amaysim Energy                     611                   564                 550                  581
              Click Energy                       611                   577                 575                  581
              Diamond Energy                     603                   543                 543                  543
              Energy Locals                      606                   546                 545                  548
              EnergyAustralia                    572                   504                 495                  527
              Lumo Energy                        592                   531                 531                  531
              Momentum Energy                    576                   —                    —                   —
              Next Business Energy               541                   487                 443                  503
              Origin Energy                      582                   547                 496                  582
              Powerclub                           —                    507                 490                  524
              Powerdirect                        609                   547                 547                  547
              Powershop                          552                   490                 470                  514
              QEnergy                            760                   488                 480                  497
              Red Energy                         592                   523                 511                  567
              Simply Energy                      561                   513                 504                  518
              Simple average                     603                   525                 509                  540
              Weighted average                   596                   534                 496                  565
             Note: A dash (—) shows the retailer did not have a small business flat rate standing/market offer published on
             Energy Made Easy in the March quarter. Powerclub's bills include its fee of $40 per 1,000 kWh of annual
             consumption for access to wholesale rates; we assume this fee includes GST.
             Sources: Energy Made Easy; QCA analysis.

             The direction notice requires the QCA to include a bill for a regional Queensland customer of
             similar class on a standard retail contract in this report. The equivalent bill for notified prices for
             the March quarter of 2019 is $585 (GST included). This is calculated by:
              multiplying the notified supply charge for 2018–19 (132.437 cents per day (GST excluded),
               including metering charge) by 90 days; and then
              adding the multiple of the notified usage charge for 2018–19 (26.442 cents per kilowatt hour
               (GST excluded)) and 1,561 kilowatt hours, before adding GST to the total amount.10




10
     QCA 2018, Regulated retail electricity prices for 2018–19, final determination, May (page 77, table 23).


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           Figure 2 Bills for a typical small business flat rate customer, January to March 2019



              $800
              $750
              $700
              $650
              $600
              $550
              $500
              $450
              $400




                     Lowest market offer        Highest market offer          Notified price        Standing offer


           Notes: Powerclub did not have a small business flat rate standing offer published on Energy Made Easy in the
           March quarter. Momentum Energy did not have a small business flat rate market offer published on Energy
           Made Easy in the March quarter.
           Sources: Energy Made Easy; QCA analysis.

2.2.1      QCA assessment
           SEQ offers
           Standing and market offer bills
           Based on the offers published in the March quarter, retailers' standing offer bills were generally
           higher than their market offer bills. For a typical small business customer:
            standing offer bills ranged from $541 (Next Business Energy) to $760 (QEnergy)
            market offer bills ranged from $443 (Next Business Energy) to $609 (AGL).
           The lowest market offer available in the market in the March quarter was Next Business
           Energy's Business Single Rate Restricted Offer ($443). The offer did not have the lowest supply
           or usage charges in the market; the conditional 18 per cent discount (off the total bill) when
           bills are paid by the due date made it the cheapest offer. The offer was only available on 8
           January 2019.
           Small business customers on standing offers could generally have reduced their bills in the
           March quarter by switching to a market offer. For example, by switching from the highest
           standing offer to the lowest market offer, they could have reduced their bill by $316 (or 42 per
           cent). Customers on market offers also had the opportunity to save up to $166 (or 27 per cent)
           by switching from the highest to the lowest market offer.
           Other incentives and benefits
           Seven retailers attached other incentives or benefits to at least one of their small business flat
           rate market offers in the March quarter.




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           Table 5     Other incentives and benefits attached to small business flat rate market offers,
                       March quarter 2019
                 Retailer                                          Other incentives and benefits
             Amaysim               Online sign-up credit: $100 credit ($50 on the first bill and $50 on the first bill after 12
             Energy                months) when signing up online with an eligible promocode or by calling and mentioning
                                   the offer (Business 1 offer available from 30 August 2018 to 4 January 2019).
                                   Sign-up credit: $25 credits on the first four bills (total value of $100) with an eligible
                                   promocode (Business 1 offer available from 14 September 2018 to 4 January 2019).
             Click Energy          Online sign-up credit: $50 credit ($25 on the first bill and $25 on the first bill after 12
                                   months) when signing up online with an eligible promocode (Business Choice offers
                                   available from 3 December 2018 to 4 January 2019 and from 22 February 2019).
             EnergyAustralia       Fixed rates: No price rises for the coming two years, including no government, network or
                                   consumer price index increases. No premium added before the rate is fixed (Rate Fix
                                   (Business) offer available from 30 August 2018).
             Lumo Energy           No contract term: 'The freedom of no contract term' (Business Premium (No Exit Fee)
                                   offers available from 1 October 2018 to 25 January 2019).
             Origin Energy         Rate freeze: Guarantee of no electricity rate rises (usage and supply charges) during the
                                   benefit period (Rate Freeze offer available from 5 September 2018).
             Red Energy            Qantas points: 10,000 bonus Qantas Points once Red Energy supplies energy and
                                   additional Qantas Points per $1 on the bill when paying in full, available to new customers
                                   only (2 points on the Qantas Red Easy and Qantas Red Saver—Qantas Business Rewards
                                   offers, both available from 21 January 2019).
                                   Qantas points: 10,000 bonus Qantas Points once Red Energy supplies energy and
                                   additional Qantas Points per $1 on the bill when paying on time, available to new
                                   customers only (2 points on the Qantas Red Saver—Qantas Frequent Flyer offer, 3 points
                                   on the Qantas Red Saver (Bundled) offer, 7 points on the Qantas Red Plus offer, and 8
                                   points on the Qantas Red Plus (Bundled) offer, all available from 21 January 2019).

             Simply Energy         Online sign-up credit: $50 credit on the first bill when signing up online (Business Save 10
                                   Online offers available from 10 October 2018).
           Notes: 1st Energy, AGL, Alinta Energy, Diamond Energy, Energy Locals, Next Business Energy, Powerclub,
           Powerdirect, Powershop and QEnergy did not attach any other incentives or benefits to their small business flat
           rate market offer(s) in the March quarter. Powerclub listed an 'access to wholesale rates' incentive on its offers
           whereby, to participate in the wholesale market, a customer must make a minimum one-off, refundable (at its
           value at time of exit) contribution to the customer's Powerbank of $40 per 1,000 kWh of annual consumption.
           However, we consider that this aspect of Powerclub's offers should be included as a fee type, not an incentive, on
           Energy Made Easy. Where a retailer offered an incentive or benefit, it did not necessarily attach the incentive or
           benefit to all of its small business flat rate market offers. With the exception of Simply Energy—who states on
           Energy Made Easy that incentives are applied to bills before GST—retailers' incentives are reported as, or
           assumed to be, GST inclusive.
           Source: Energy Made Easy.

           Our observations on the expansion of incentives and benefits in residential market offers
           (above) apply equally to small business offers. That is, the increased use of incentives and
           benefits provides customers with a wider range of options to choose from when reviewing
           offers, but creates a new element of complexity for customers.

           SEQ offers and notified prices
           In the March quarter, each retailer that published market offers on Energy Made Easy had at
           least one market offer available that was equal to or lower than the equivalent bill for notified
           prices. Quarterly bills for standing offers were higher than the equivalent bill for notified prices
           in the case of 11 retailers, and lower in the case of six retailers.




                                                                 11
Queensland Competition Authority                                                                                Price monitoring




           Quarterly changes in lowest market offer bill
           The table below shows the quarterly changes, in percentage terms, in retailers' lowest market
           offers compared to the June, September and December quarters of 2018.
           Table 6      Quarterly changes in lowest market offer bill for a typical small business flat rate
                        customer, 2018–19
                       Retailer               June quarter to            September quarter to          December quarter to
                                           September quarter (%)         December quarter (%)           March quarter (%)
             1st Energy                             –5.4                           0.0                          0.0
             AGL                                    –0.7                         –11.4                          0.0
             Alinta Energy                          –2.8                           0.0                          0.0
             Amaysim Energy                         –10.0                         +2.3                         –1.1
             Click Energy                           –10.0                         +4.5                         +1.1
             Diamond Energy                          n/a                           0.0                          0.0
             Energy Locals                           0.0                           0.0                          0.0
             EnergyAustralia                        –8.9                           0.0                         –1.6
             ERM Power                               0.0                          n/a                           n/a
             Lumo Energy                             0.0                           0.0                          0.0
             Next Business Energy                   –1.1                         –10.9                          0.0
             Origin Energy                          –1.8                           0.0                         –3.5
             Powerclub                               n/a                          n/a                           n/a
             Powerdirect                            –0.7                           0.0                          0.0
             Powershop                              –11.8                          0.0                          0.0
             QEnergy                                +12.6                         –4.0                         –0.3
             Red Energy                             –3.8                           0.0                          0.0
             Simply Energy                          –7.0                           0.0                          0.0
           n/a: The retailers did not have a small business flat rate market offer published on Energy Made Easy in the
           preceding quarter. ERM Power had no small business flat rate market offer published in the December quarter.
           Note: Quarterly changes are based on retailers' annual bills, as the four quarters vary in length (90 to 92 days).
           Sources: Energy Made Easy; QCA analysis.

           The table shows that the lowest offers of eleven retailers remained unchanged in the March
           quarter, while four retailers' lowest offers became cheaper for a typical customer and one
           retailer's lowest offer became more expensive than in the previous quarter.

2.3        Conclusion
           The key points of our comparison and assessment of standing and market offer prices for the
           period 1 January to 31 March 2019 are below.




                                                              12
Queensland Competition Authority                                                                    Price monitoring




             Summary
             (1)     Standing offer bills were generally higher than market offer bills in the March quarter.
             (2)     The cheapest residential flat rate market offer available in the March quarter,
                     calculated for the typical customer, was Click Energy's Saturn offer.
             (3)     The cheapest small business flat rate market offer available in the March quarter,
                     calculated for the typical customer, was Next Business Energy's Business Single Rate
                     Restricted Offer.
             (4)     In the March quarter, all retailers (except DC Power and Mojo Power) had at least one
                     market offer available that was lower than the equivalent bill for notified prices, and
                     most retailers' standing offers were higher than the equivalent bills for notified prices.
             (5)     Almost half the retailers with residential or small business market offers available in
                     the March quarter attached other incentives or benefits to at least one of their offers.




                                                        13
Queensland Competition Authority                                                    Glossary




GLOSSARY

1st Energy                         1st Energy Pty Ltd
ABN                                Australian Business Number
ACCC                               Australian Competition and Consumer Commission
AER                                Australian Energy Regulator
AGL                                AGL Sales Pty Ltd
Alinta Energy                      Alinta Energy Retail Sales Pty Ltd
Amaysim Energy                     amaysim Energy Pty Ltd
Click Energy                       Click Energy Pty Ltd
DC Power                           DC Power Co
Diamond Energy                     Diamond Energy Pty Ltd
Dodo Power & Gas                   Dodo Power & Gas (M2 Energy Pty Ltd)
Electricity Act                    Electricity Act 1994 (Qld)
EnergyAustralia                    EnergyAustralia Pty Ltd
Energy Locals                      Energy Locals Pty Ltd
ERM Power                          ERM Power Limited
GST                                Goods and Services Tax
kWh                                kilowatt hours
Locality Planning Energy           Locality Planning Energy Pty Ltd
Lumo Energy                        Lumo Energy (Qld) Pty Ltd
Mojo Power                         Mojo Power Pty Ltd
Momentum Energy                    Momentum Energy Pty Ltd
n/a                                not applicable
Next Business Energy (NBE)         Next Business Energy Pty Ltd
NERL                               National Energy Retail Law
NERR                               National Energy Retail Rules
Origin Energy                      Origin Energy Retail Pty Ltd
People Energy                      People Energy Pty Ltd
Powerclub                          Power Club Limited
Powerdirect                        Powerdirect Pty Ltd
Powershop                          Powershop Pty Ltd
QCA                                Queensland Competition Authority
QEnergy                            QEnergy Limited
Qld                                Queensland
ReAmped                            ReAmped Pty Ltd
Red Energy                         Red Energy Pty Ltd
Sanctuary Energy                   Sanctuary Energy Pty Ltd
SEQ                                south east Queensland
Simply Energy                      Simply Energy Pty Ltd



                                                             14
Queensland Competition Authority        Appendix A: Minister's letter and direction notice




APPENDIX A: MINISTER'S LETTER AND DIRECTION NOTICE




                                   15
Queensland Competition Authority        Appendix A: Minister's letter and direction notice




                                   16
Queensland Competition Authority        Appendix A: Minister's letter and direction notice




                                   17
Queensland Competition Authority                                     Appendix B: Assumptions and additional information




APPENDIX B: ASSUMPTIONS AND ADDITIONAL INFORMATION

Offers available in the March quarter
The terms of reference in the direction notice requires the QCA to report on prices which were available
to customers in each three-month period (from 1 July 2018 to 30 June 2019). We therefore included all
retailers' offers that were generally available between 1 January and 31 March 2019. This includes any
offers that were available on 1 January, but expired before 31 March 2019.

Other incentives and benefits
We attributed 90 days of value to the annual value of financial incentives to calculate the quarterly bills.
We consider that this more accurately reflects the benefit to a customer over the quarter. We also
included Simply Energy's AFL Free Kick monthly credit of $10 on every bill in the bill calculations.
Other benefits which we note were attached to offers in the March quarter, but which did not provide
direct reductions to electricity bills, were not included in our bill calculations, such as the:
 Amazon Echo Dot (3rd Gen) device that was included as a sign-up benefit on AGL's Residential Savers
  Home Connect offer. AGL stated on the offer that the recommended retail price of the device was $79
 Velocity points on EnergyAustralia's Velocity Anytime Saver offer
 Qantas points on Red Energy's Qantas Red Saver—Qantas Business Rewards, Qantas Red Plus—Qantas
  Business Rewards, Qantas Red Saver, Qantas Red Saver—Qantas Frequent Flyer, Qantas Red Saver
  (Bundled), Qantas Red Plus, Qantas Red Plus (Bundled) and Qantas Red Plus—Qantas Frequent Flyer
  offers
 Gold Class or Event Cinema movie tickets on Simply Energy's Simply Movies Plus 10, Movies Plus 10
  Online and Movies Plus 10 FIT offers.

Assigning the total value of sign-up incentives to the bill
The payout time of the second half of some of Amaysim Energy's and Click Energy's sign-up incentives was
open to interpretation. For instance, customers signing up for Amaysim Energy's Electricity 2, Solar 2 and
Business 1 offers were promised '$100 in bill credits — $50 on first bill & $50 on first bill after 12 months'.
It is unclear whether Amaysim Energy and Click Energy apply the second bill credit to the 12th or the 13th
monthly bill. In such cases, only the first half of the incentive was assigned to the annual bill calculation as
we consider the better interpretation is that the second part of the incentive is paid to the customer after
12 months.

Residential offers available to small business customers
AGL
AGL published one residential flat rate market offer on Energy Made Easy in the March quarter that was
available to small business customers (Home Office Everyday (AGL548106MS) available from 31 July 2018
to 18 February 2019). Eligibility for this offer was restricted to small business customers with an Australian
Business Number (ABN), home office and a residential meter.
We reallocated the Home Office Everyday offer to the residential tariff reporting, as the supply charge (99
cents per day) and usage charge (25.5 cents per kilowatt hour) were the same as (most of) AGL's




                                                      18
Queensland Competition Authority                                           Appendix B: Assumptions and additional information




residential offers, and both charges were lower than the supply charge (133 cents per day) and usage
charge (27.8 cents per kilowatt hour) on (most of) AGL's small business offers.
We consider the reallocation of this offer delivers a more meaningful analysis of small business offers for
the purpose of reporting on residential and small business offers under the direction notice.

Red Energy
Red Energy published two residential flat rate market offers on Energy Made Easy in the March quarter
that were only available to customers with an ABN and a valid Qantas business rewards membership
(Qantas Red Saver—Qantas Business Rewards (RED797413MR), available from 21 January 2019, and
Qantas Red Plus—Qantas Business Rewards (RED846428MR), available from 12 February 2019).
Although a business number and a Qantas business rewards membership are required for the offers, we
did not reallocate these two offers to the small business tariff reporting, as the supply charge (97.9 cents
per day) and usage charge (24.3 cents per kilowatt hour) were the same as Red Energy's other residential
flat rate market offers, and lower than Red Energy's small business flat rate supply and usage charges.
We consider that leaving these two offers in the residential flat rate analysis delivers a more meaningful
analysis of small business and residential offers for the purpose of reporting on the available offers under
the direction notice. This also ensures that the two Red Energy offers are treated in the same way as
AGL's Home Office Everyday offer.

Calculating bills using our published dataset
The table below shows how stakeholders can calculate bills for the March quarter using the dataset
published on the QCA website.
Table 7    Calculating a quarterly bill

 Supply costs                      +   Cost of electricity imported   +   Membership       –   One-off sign-up      +   GST
 (daily supply charge x number         (usage charge x customer's         fees (where          bonuses,
 of days in the quarter)               consumption level)                 applicable)          guaranteed and
                                                                                               conditional
                                                                                               discounts




                                                              19
Queensland Competition Authority                                                                   Appendix C: Weighted bills




APPENDIX C: WEIGHTED BILLS

Minister's direction notice
Section 2(d) of the direction notice requires the QCA to include in each quarterly report an average bill
weighted by retailer market share by contract type (standing and market offers using market shares from
the previous quarter) to the extent the data required to calculate this bill is available.

Data availability
In September 2018, the AER removed all retail performance data from its website after discovering what
it described as 'significant errors' in the data provided by AGL. Given AGL's retail market share, the errors
impacted on many of the AER's reporting metrics over the 2017–18 financial year. At that time, the AER
stated that it expected to release all quarterly reports for 2017–18 in December 2018.11
In our market monitoring report for the December quarter of 2018, we stated that we would include
weighted average bills as supplementary information in later reports, once the revised AER data on
market shares became available. In late January 2019, the AER published five quarters of performance
data from the September quarter 2017 to the September quarter 2018, and annual data from 2013–14.12

Weighted bills for the September and the December quarters of 2018
Residential customers (tariff 11)
The tables below show the average bills for a typical residential flat rate customer for the September
quarter and the December quarters of 2018, weighted by retailer market share. As a comparison, the
tables also include the simple (unweighted) averages that we included in the September and the
December quarter reports as the AER data was not available yet.
Table 8     Average bills for a typical residential flat rate customer, July to September 2018
                                    Standing offer ($)       Average               Lowest                   Highest
                                                          market offer ($)      market offer ($)         market offer ($)
 Simple (unweighted) average               403                  338                   318                       361
 Weighted average                          387                  341                   320                       372
Sources: QCA 2018, SEQ retail electricity market monitoring: July to September 2018, market monitoring report, October
(section 2.1 (table 1)); QCA calculations based on AER data from the preceding quarter (Q4 2017–18).

Table 9     Average bills for a typical residential flat rate customer, October to December 2018

                                    Standing offer ($)       Average               Lowest                   Highest
                                                          market offer ($)      market offer ($)         market offer ($)

 Simple (unweighted) average               403                  341                   321                       362

 Weighted average                          387                  339                   309                       374
Sources: QCA 2019, SEQ retail electricity market monitoring: October to December 2018, market monitoring report, January
(section 2.1 (table 1)); QCA calculations based on AER data from the preceding quarter (Q1 2018–19).




11
     AER 2018, 'AER removes retail performance data from its website', communication notice, 11 September.
12
     AER, Retail energy market performance update for Quarter 1 2018–19, AER website, viewed January 2019.


                                                          20
Queensland Competition Authority                                                                   Appendix C: Weighted bills




Small business customers (tariff 20)
The tables below show the average bills for a typical small business flat rate customer for the September
quarter and the December quarters of 2018, weighted by retailer market share. As a comparison, the
tables also include the simple (unweighted) averages that we included in the September and the
December quarter reports, as the AER data was not available yet.
Table 10 Average bills for a typical small business flat rate customer, July to September 2018

                                   Standing offer ($)        Average               Lowest                   Highest
                                                          market offer ($)      market offer ($)         market offer ($)

 Simple (unweighted) average              623                   540                   530                       551

 Weighted average                         610                   552                   530                       582

Source: QCA 2018, SEQ retail electricity market monitoring: July to September 2018, market monitoring report, October
(section 2.2 (Table 4)); QCA calculations based on AER data from the preceding quarter (Q4 2017–18).

Table 11 Average bills for a typical small business flat rate customer, October to December 2018

                                   Standing offer ($)        Average               Lowest                   Highest
                                                          market offer ($)      market offer ($)         market offer ($)

 Simple (unweighted) average              623                   538                   524                       554

 Weighted average                         609                   549                   517                       580

Source: QCA 2019, SEQ retail electricity market monitoring: October to December 2018, market monitoring report, January
(section 2.2 (Table 4)); QCA calculations based on AER data from the preceding quarter (Q1 2018–19).




                                                          21
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