AEMC: energy debate suffering from reactive policy

AEMC chief executive Anne Pearson

The Australian Energy Market Commission (AEMC) has made a submission to the Australian Senate Select Committee’s inquiry into fair dinkum power. The Committee is investigating how energy consumers could be empowered to play a more important role in the national electricity market (NEM), especially as technology evolves and improves.

In its submission, the AEMC’s chief executive Anne Pearson says the energy debate is “currently suffering from a focus on short-term issues and reactive policy responses”.

“Such a focus can be detrimental and can result in a patchwork of policies that distract us from the key long-term challenges facing the energy sector as it transitions,” she said.

“To address these challenges we need policy focus from legislators and governments to shift toward regulatory frameworks that will support new investment in the energy sector.

“Investments in the energy sector are capital intensive, take many years to plan and build and are therefore long-term in nature.

“To support such investments, we require policy settings that are reliable and flexible in adapting as the energy sector transitions.”

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The AEMC has spearheaded consumer reforms with new rules that make it easier for customers to choose and switch retailers, access and respond to their consumption data, and receive and respond to price signals. It also makes rules on consumer protections, recognising that not all consumers can or want to be active participants.

The submission outlines what the AEMC is doing to:

  • support consumers in choosing an energy supplier and deal that suits their needs
  • provide appropriate consumer protections
  • facilitate the right investment in energy infrastructure in the right place at the right time
  • provide a stable and secure system where all technical requirements are a maintained
  • underpin a grid that efficiently transports power from where it’s made to where it is needed
  • reform gas markets, giving customers the ability to buy, sell and transport gas to where it’s needed.

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It also highlights what governments can do to support consumer choice to drive change in the energy sector. Specifically, the AEMC points out that governments should introduce a nationally agreed mechanism for the electricity sector to reduce emissions in the power system and at the same time, have financial incentives for investors to provide energy services at times when consumers and the power system need it. Policy stability and predictability are important prerequisites for the investment that will be required in the sector over the coming decades.

New investment in the energy sector will allow new technologies to be integrated and utilised, and the power system to continue to be managed securely. However new investment – especially investment to support the security and reliability of the power system in light of the changing generation mix – may also create additional cost pressures in the short to medium term. That’s why the AEMC is focussed above all on lowest cost solutions, bearing in mind the more costs you put into the system, the more burden there is on consumers.

Read the AEMC’s full submission here.

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