Internal transfer pricing and profitability
This project was prompted by concerns about competition in the generation and wholesale electricity market and public confidence in the sector.
The Authority introduced new provisions in the Electricity Industry Participation Code 2010 mandating the annual disclosure of mass market internal transfer prices (ITP) by integrated generator retailers, the methodology used to derive them and the disclosure of retail gross margin reports by certain retailers. Improved disclosure of these pricing practices helps strengthen trust and confidence in the efficient operation of the electricity market for the long-term benefit of consumers.
This decision addresses recommendation D3 of the Final Report of the Electricity Price Review – ‘Make generator-retailers release information about the profitability of their retailing activities’.
The new Code provisions came into effect on 30 November 2021.
The Authority has developed an ITP benchmark tool allowing users to compare the ITPs of the large integrated generator retailers to a series of benchmarks. This tool makes it easier to interpret the ITP information and the methodologies used to derive it. The tool is available on the Authority's interactive dashboards webpage.
The Authority expects the tool to allow submitted ITP and retail gross margin information to be available by Q2 2022 and will provide another update closer to the time.
Overview
| Date | Activity |
|---|---|
| 26 Oct 2021 | Development: In October, the Authority decided to amend the Electricity Industry Participation Code 2010 (Code) to require the disclosure of mass market internal transfer price (ITP) information by large integrated generator retailers and retail gross margin reports Read more |
| 31 Aug 2021 | Development: The Authority is mandating the annual disclosure of mass market internal transfer prices by integrated generator retailers, the methodology used to derive them and the disclosure of retail gross margin reports by retailers. Read more |
| 29 Apr 2021 | Event: The Authority held a briefing on the internal transfer prices and segmented profitability reporting consultation Read more |
| 08 Apr – 18 May 2021 | Consultation: We are proposing improvements to the disclosure of internal transfer pricing. Read more |
| 17 Nov 2020 | Development: The Authority will consult on a Code amendment to improve the disclosure of internal transfer prices and segmented profitability. Read more |
| 25 Aug 2020 | Development: We sent letters to the five largest vertically integrated generator-retailers asking them to voluntarily provide information on their internal transfer pricing. Read more |
