The Government says regulatory changes in the retail fuel market are coming and is urging companies to take “pre-emptive action”.
Energy minister Megan Woods says regulation is needed in response to the Commerce Commission’s findings around anti-competitive practices and the Fuel Market Bill will be passed into law later this year.
The commission released its final report last December and recommended a number of changes to stimulate competition and benefit consumers.
“The action the Government is taking in response to the commission’s report forms a package of solutions to deal with entrenched problems that have been around since the 1980s,” Woods says.
“Since the report’s release in December, we’ve moved quickly to act on the commission’s recommendations. We’re introducing changes that will promote greater competition in the fuel market at the wholesale level and lead to lower prices on the forecourt for motorists.
“We know that the cost of fuel is significant for households and businesses. The Government is giving this bill priority …
“The commission’s report found that companies are making high profits due to a lack of competition in the industry.
“The report confirmed our concerns that motorists are paying higher prices for petrol and diesel than could be expected in a competitive market,” Woods says.
Industry consultation on the regulations will be carried out in coming weeks. Ministers will also be writing to fuel companies asking them to make the changes before it passes into law.
Regulatory changes in the Fuel Market Bill currently being drafted include:
- A more transparent wholesale pricing regime requiring fuel suppliers to publicly post the prices they sell to wholesale customers at storage terminals.
- Rules to ensure contracts between wholesale fuel suppliers and their customers are fair and support competition.
- Providing a dispute resolution scheme for the new regime.
- Improvements to the monitoring of the fuel market by requiring fuel companies to collect and disclose certain information.
- Requiring retail fuel sites to display premium fuel prices on forecourt price boards.
Z Energy said it “generally supports the scope of the market study” but retail fuel prices are impacted by other major factors such as crude oil prices, movements in the NZ dollar against other currencies (especially the US dollar), and the level of taxes and levies on fuel.
“Z agrees that oil prices, exchange rates and taxes and levies are outside the direct scope of the market study.
“However, those factors do influence retail fuel supply and demand, and therefore market outcomes.
“For example, the imposition of the regional fuel tax in Auckland has caused significant changes in demand at certain sites as consumers have decreased their purchases in response to higher headline prices, while high oil prices and adverse exchange rate fluctuations can impact fuel suppliers’ costs and risk profiles and so influence the way they price.
“Z submits these factors should not be excluded from consideration to the extent they affect retail competition.”
