Networks must champion consumer choice: AEMC

smartmeter

Ensuring Australia’s regulatory framework facilitates competitive and efficient energy markets is crucial to managing the energy revolution, the rule maker for Australian electricity and gas markets has said.

Speaking at the Australian Energy Week conference in Melbourne, Australian Energy Market Commission (AEMC) chairman John Pierce outlined regulatory challenges raised by renewables and electricity storage. Acknowledging the increasingly “multidirectional” flow of energy, Mr Pierce said energy technologies are enabling a devolution of decision making for energy networks and regulators.

“More than 1.5 million households in Australia now have rooftop solar. Combine this with the possibilities of battery storage and Australians have the opportunity to produce and consume their own power like never before,” he said, in a statement read out by AEMC chief executive Anne Pearson.

“At the same time, addressing the intermittency of renewable generation is one of the drivers behind storage facilities participating in the wholesale market. This is an exciting development as we seek to successfully transform the electricity sector to result in a less carbon intensive future.”

Mr Pierce’s speech highlighted the AEMC supports the COAG Energy Council’s development of a policy and regulatory framework that sustains consumer choice and technological transformation.

“First and foremost this is about establishing rules that neither favour – nor prevent – particular technologies from being used,” he said.

“The Commission does not pick winners – we spend a great deal of time thinking about how to design a framework that is technologically neutral – one that can equally accommodate existing technologies, and those not yet in existence, as well as environmental requirements determined by government.

“The maturing market framework is designed to put consumers first.”

From July 1, 2017 networks will have to structure their prices to reflect the consumption choices of individual consumers and households will be able to see the dollar value of their consumption choices.

To allow consumers to respond to price signals the AEMC made new rules in November 2014 to make it easier for consumers to obtain simple, affordable, timely information from networks and retailers about the electricity they are using. Mr Pierce said the AEMC’s new rules on metering reform remove the networks’ effective metering monopoly and enable the competitive provision of advanced meters for households and small business – giving consumers more opportunities to access a wider range of energy services.

“Our country’s regulatory model draws a distinction between the operating space that can be given over to competition and the space given to monopoly functions of the networks which should remain subject to an incentive-based regulatory regime,” he said.

“The stakes are high in getting the right line between what is competitive and what should be regulated.

“Competition transfers risk from consumers to business when competing businesses bear the responsibility for their own good or bad investment decisions – and bear the responsibility for subsequent success or failure of their business models. It is only where competition cannot deliver consumer benefits that economic regulation should be contemplated.”