Market Competitive Intensity (MCI): Tasmania, Australia

Datamonitor's MCI Index offers a robust framework for measuring the development of utility Market Competitive Intensity. The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push; Customer Pull.

Report Highlights
MCI scores are calculated using two different methods. The first, the simple weighted average (additive) measure shows overall competitive intensity. The second, the multiplicative method, is more complex. It prevents markets with an overly wide spread of underlying raw scores from exerting undue influence over, or skewing, the final result.

Liberalisation, energy pricing issues and environmental concerns will remain key drivers of gas and power market dynamics throughout the MCI forecast period.
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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Introduction: Datamonitor's MCI Index offers a robust framework for measuring the development of energy Market Competitive Intensity 2
The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment 3
The MCI assessment draws on nine underlying metrics grouped into three broad clusters: market framework; supplier push; customer pull 3
The MCI Index measures the development of 20 diverse Asia Pacific gas and power markets 4
The MCI Index assesses markets in December 2007, and on July 1, 2010, in addition to driving a market switching forecast 4
Each of the nine pillars has an assessment scale to allow for the comparison of diverse markets (see appendix for more details) 5
Two differing overall MCI scores are calculated to ensure full clarity of results 5
A simple weighted average (additive) measure shows overall competitive intensity 5
A weighted multiple (multiplicative) measure shows overall competitive intensity 5
The MCI framework has a number of applications for your organization 6
Context: Both the power and gas markets have weak Supplier Push and Customer Pull scores 7
The Tasmanian power market will remain stagnant over the forecast period 7
As compared with other states, the gas market is yet to be competitive; however the score is forecast to improve in the short term 8
Power MCI: Market Framework metrics support the overall power sector score 9
All the Market Framework pillars score highly both in the current and forecast period 9
Effectiveness of regulator [2007: 6/10 2010: 9/10] 9
Effectiveness of balancing and data transfer [2007: 9.5/10 2010: 10/10] 10
Other than Traded Market maturity, Supplier Push metrics remain modest 10
Wholesale market fragmentation [2007: 1/10 2010: 1/10] 10
Retail market fragmentation [2007: 1/10 2010: 1/10] 10
Traded market maturity [2007: 9/10 2010: 10/10] 10
Customer pull remains weak in Tasmania by 2010 11
Access to market information and assistance [2007: 2/10 2010: 8/10] 11
Market information remains limited in Tasmania with main suppliers remaining the only source of information and assistance, 11
Consumer representation [2007: 2/10 2010: 3/10] 11
Propensity to switch [2007: 0/10 2010: 0/10] 11
Gas MCI: The Tasmanian gas market has strong Market Framework scores 12
Market Framework metrics further improve over the forecast period 12
Effectiveness of regulator [2007: 3.5/10 2010: 9/10] 12
Ease of third party access [2007: 7/10 2010: 10/10] 13
Effectiveness of balancing and data transfer [2007: 7/10 2010: 8/10] 13
Concentrated wholesale and retail markets curtail Supplier Push metrics 13
Wholesale market fragmentation [2007: 1/10 2010: 1/10] 13
Retail market fragmentation [2007: 1/10 2010: 2.5/10] 13
There are two active retailers in the Tasmanian gas sector. The distribution and retailing service is provided by Powerco, a company owned by Babcock & Brown Infrastructure. In addition to Powerco, Aurora Energy also has a retailing business. Tasmania opened its gas retailing sector to full competition in July 2005, though the Tasmanian government also retains some ownership of the gas business (for example - Aurora Energy). Gas retailing services are also not regulated in Tasmania with no obligation of supply in place. The Tasmanian authorities do not consider the supply of natural gas an essential service, therefore it is expected that the retail fragmentation will remain concentrated by 2010. 13
Customer Pull scores will remain weak over the forecast period 13
Access to market information and assistance [2007: 1/10 2010: 3/10] 13
Consumer representation [2007: 1/10 2010: 2/10] 13
Propensity to switch [2007: 0/10 2010: 0/10] 14
Outlook: Competitive intensity in the gas sector will continue to lag that seen in the power sector 15
MCI Scores 16
APPENDIX 19
Definitions 19
Ask the analyst 24
LIST OF TABLES
Table 1: Market Competitive Intensity, Tasmania 2007-10 16
Table 2: MCI additive, Asia Pacific 2007-10 17
Table 3: MCI multiplicative, Asia Pacific 2007-10 18
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Table 1: Market Competitive Intensity, Tasmania 2007-10 16
Table 2: MCI additive, Asia Pacific 2007-10 17
Table 3: MCI multiplicative, Asia Pacific 2007-10 18
Figure 1: MCI assessment scale 3
Figure 2: MCI assessment framework 3
Figure 3: MCI market coverage 4
Figure 4: MCI scales 5
Figure 5: MCI Applications 6
Figure 6: Asia Pacific Power Market Competitive Intensity, 2007-10 7
Figure 7: Asia-Pacific Gas Market Competitive Intensity, 2007-10 8
Figure 8: Power Market Competitive Intensity Index, Tasmania 9
Figure 9: Gas Market Competitive Intensity Index, Tasmania 12
Figure 10: Market Competitive Intensity, Tasmania 15
Figure 11: Scale for MCI assessment, effectiveness of regulator 19
Figure 12: Scale for MCI assessment, ease of third party access 20
Figure 13: Scale for MCI assessment, effectiveness of balancing and data transfer 20
Figure 14: Scale for MCI assessment, wholesale market fragmentation 21
Figure 15: Scale for MCI assessment, retail market fragmentation 21
Figure 16: Scale for MCI assessment, traded market maturity 22
Figure 17: Scale for MCI assessment, access to market information and assistance 22
Figure 18: Scale for MCI assessment, consumer representation 23
Figure 19: Scale for MCI assessment, propensity to switch 24
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