The Authority has reviewed the methodologies that the five largest generator-retailers use to derive their internal transfer prices, which determine the profit allocated between the generation and retailing parts of their businesses. The Authority has also examined the profitability measures that generator-retailers publish for their retailing and generation operations. This review is part of a wider body of work to promote confidence in the wholesale market. The review also addresses a recommendation of the Electricity Price Review to enhance reporting on retail and generation profitability.

In most cases, the Authority found that the internal transfer prices of the generator-retailers were referenced to historic ASX futures prices. However, the internal transfer prices reported by the five generator-retailers vary significantly, reflecting different methodological choices. The Authority found there is limited public disclosure of these methodologies and considers that improving disclosure may foster public understanding and confidence in these prices.

The Authority will release a consultation paper in the new year on a proposed Code amendment to enhance disclosure of transfer prices and methodologies. The consultation paper will seek feedback on whether disclosure of some measure of retail electricity profitability would also be valuable. 

The Authority intends to release the consultation paper in March 2021.