Market Competitive Intensity (MCI): Western 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: Competitive intensity lags many other parts of Asia Pacific 7
Western Australia's speed of competitive intensity development fails to keep pace with other markets in the region 7
The gas market competitive intensity ranking falls sharply over the forecast period 8
Power MCI: Other than regulation, all the power metrics remain weak over the forecast period 9
Strong dominance of a public owned market structure leads to a weak market framework 9
Effectiveness of regulator [2007: 7/10 2010: 8/10] 9
Effectiveness of balancing and data transfer [2007:3.5/10 2010: 3.5/10] 10
Supplier Push factors remain modest over the forecast period 10
Wholesale market fragmentation [2007: 4/10 2010: 4.5/10] 10
Retail market fragmentation [2007: 3/10 2010: 3/10] 11
Traded market maturity [2007: 1/10 2010: 3/10] 11
A lack of full market opening curtails the Customer Pull metrics 11
Access to market information and assistance [2007: 3/10 2010: 4.5/10] 11
Consumer representation [2007: 2/10 2010: 3/10] 11
Propensity to switch [2007: 0/10 2010: 0/10] 12
Gas MCI: Competitive intensity shows little development over the forecast period 13
Market Framework scores are spread across the scale 13
Effectiveness of regulator [2007: 4/10 2010: 5/10] 13
Ease of third party access [2007: 8/10 2010: 9/10] 14
Effectiveness of balancing and data transfer [2007: 2/10 2010: 3/10] 14
Supplier Push metrics remain limited over the forecast period 14
Wholesale market fragmentation [2007: 5.5/10 2010: 5.5/10] 14
Retail market fragmentation [2007: 0/10 2010: 1/10] 14
Customer Pull metrics are at the bottom end of the scale 15
Access to market information and assistance [2007: 2/10 2010: 3/10] 15
The high level of concentration in the wholesale and retail gas market makes access to any reliable market information a difficult task. The ERA is the only body that checks for compliance and distributes relevant information in the public domain. With such a high level of retail market concentration, independent price sources are not yet required. 15
Consumer representation [2007: 2/10 2010: 3.5/10] 15
Propensity to switch [2007: 0/10 2010: 0.5/10] 15
Outlook: Western Australia's competitive intensity will remain limited in the coming years 16
MCI Scores 17
APPENDIX 20
Definitions 20
Ask the analyst 27
LIST OF TABLES
Table 1: Market Competitive Intensity, Western Australia 2007-10 17
Table 2: MCI additive, Asia Pacific 2007-10 18
Table 3: MCI multiplicative, Asia Pacific 2007-10 19
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Table 1: Market Competitive Intensity, Western Australia 2007-10 17
Table 2: MCI additive, Asia Pacific 2007-10 18
Table 3: MCI multiplicative, Asia Pacific 2007-10 19
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, Western Australia 9
Figure 9: Gas Market Competitive Intensity Index, Western Australia 13
Figure 10: Market Competitive Intensity, Western Australia 16
Figure 11: Scale for MCI assessment, effectiveness of regulator 20
Figure 12: Scale for MCI assessment, ease of third party access 21
Figure 13: Scale for MCI assessment, effectiveness of balancing and data transfer 21
Figure 14: Scale for MCI assessment, wholesale market fragmentation 22
Figure 15: Scale for MCI assessment, retail market fragmentation 23
Figure 16: Scale for MCI assessment, traded market maturity 24
Figure 17: Scale for MCI Assessment, access to market information and assistance 25
Figure 18: Scale for MCI assessment, consumer representation 26
Figure 19: Scale for MCI assessment, propensity to switch 27
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