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Energy Dispatch 2

As the pace of change in Australia’s energy markets accelerates, the need to stay up-to-date intensifies too. Energy Dispatch is the place to find out what’s going on in the regulation of networks, wholesale and retail markets across Australia’s National Energy Market states and territories. It also includes opportunities for you to have a say in the AER’s decision-making and contains key upcoming dates for your calendar. Subscribe to stay in touch.

Starting with the customer

Alongside the energy sector, the AER is going through its own transition. With a substantial increase in funding and rising community interest in, and the prominence of, energy issues, the AER is itself undergoing a process of change.

To guide us as we develop our new organisation, we’ve developed a short statement setting out what the AER is for, our objectives and how we achieve them. This captures how we already work and how we intend to move forward. Our Statement has a strong emphasis on consumer outcomes, reflected in our new purpose: to make all Australian energy consumers better off, now and in the future.

Important commitments in the Statement include:

  • making our voice heard in the ongoing debate about Australia’s energy future and regulatory approaches, and being a trusted source of information
  • prompting innovation by regulated business and being more innovative in our own work
  • looking for new ways to drive effective competition, and being ready to step in where the market or individual businesses cause detriment, especially to people in vulnerable circumstances.
We will continue to evolve our strategy as businesses, technology, consumer behaviour and community expectations change. Working with our stakeholders, we will be setting out our detailed priorities under this strategy over the coming months.

You can find our Strategic Statement here. Let us know what you think of the statement here:

AER Boost

Thousands of words have already been written about the Finkel Review Report which was handed to COAG in June. While many of the recommendations adopted by COAG will have a direct influence on how we work, perhaps the most immediate and direct impact is from the resulting 60% increase in the ongoing funding of the AER.

Dr Finkel explicitly acknowledged the importance of a well-resourced regulator in the proper functioning of the National Electricity Market, and this additional funding will go a long way towards enabling us to better meet that goal.

With additional funding now in place, we are working on improvements to compliance regimes in wholesale markets, enhanced performance monitoring of networks, and enhancing the protections and assistance available for vulnerable customers.

A new era in networks regulation

The Commonwealth Government’s decision of 20 June to abolish the Limited Merits Review from AER decisions that set network revenues also heralds new opportunities to enhance the regulation of networks for the benefit of consumers.

In the past, our engagement with network businesses has at times been adversarial, driven in part by the existence of the Limited Merits Review process. This has reduced the effectiveness of engagement between all parties and has potentially limited the development of the regulatory framework to better meet the needs of consumers and businesses. We are looking forward to working in an environment that better supports collaboration and transparency, increased certainty and reduced costs.

We have already seen the networks that have embraced this type of approach, including genuine stakeholder engagement to inform the development of their regulatory processes, enjoy the benefits of a more streamlined process that flows from reasonably costed regulatory proposals in South Australia, Victoria and Tasmania. We are looking forward to achieving more outcomes like these in the future.

Speaking at the ENA Regulation Seminar in July, AER Chair Paula Conboy said:

"This is not surprising given Australian electricity prices have increased significantly since 2008. Further significant increases in retail electricity and gas prices since the start of July have really brought the issue into sharp focus.

"Perhaps more than ever, the consumer has a market voice as well as a political voice. The context in which we now operate has seen the political optics around 'the average consumer' dramatically amplified. That can no longer be ignored."

Five minute dispatch

All the news you may have missed -

  • #energymadeeasy is going with a social media campaign that highlights our comparison site as the only free and independent government tool to help consumers find the best deals, along with key tips and reminders not to set and forget your energy bills.
  • The latest round of draft network price determinations has held gas network costs largely stable for consumers in Victoria, south western NSW and those accessing gas from the Roma to Brisbane pipeline, avoiding adding further pressure to prices paid by consumers.
  • The Customer Consultative Group (CCG) which advises the AER on energy issues that impact their members has been reconstituted for a further two years. The 12 member organisations represent a range of consumers and are required to consult with their constituents ensure their views are heard. The Consumer Challenge Panel plays a similar but distinct role specifically for network price determinations.

Plugged in

All the presentations from the ACCC/AER Regulatory Conference are now available. Held every winter, this conference brings together industry participants, policy makers, academics and regulators from around the world to hear and discuss the latest ideas about the theory of practice of regulation. Read them all at the ACCC/AER regulatory conference site.

Watt's in the pipeline

28 August – Submissions close on the first stage of the Rate of Return Guideline review.  The Rate of Return (RoR) is one of the key building blocks that determines the amount of revenue that electricity and gas network businesses can recover from customers for the use of their networks. For the first time, the new Guideline will be binding so further extensive consultation with stakeholders is planned over the coming months.

August/September – Consultation gets underway for the re-determination of the operating expenditure allowances for the NSW/ACT networks following their remittal back to the AER from the Australian Competition Tribunal. Given high levels of public interest, the scope of issues raised by the Tribunal, and the relative discretion the AER has to implement the Tribunal’s directions, the AER will engage not only with the distribution businesses but also with various consumer groups in remaking the decisions. The AEMC has recently confirmed that the any changes in revenue as a result of the remade determinations can be ‘smoothed’ and recovered from customers over the current regulatory control period (2014-2019) and the next regulatory control period starting on 1 July 2019. Further details can be found at the AEMC website.

August/September – The AER is establishing its approach to assessing competition in Australia's wholesale electricity market. Ultimately the AER will be undertaking comprehensive long-term assessments of the wholesale electricity market to determine whether competition is effective in the face of rising wholesale prices and the rapidly changing mix of generation. Keep an eye on the AER website for updates and opportunities to contribute.

But ... there's more

For more information about other opportunities to contribute to energy sector policy reviews, regulatory processes and inquiries over the coming weeks and months, check out the Advocates' calendar on Energy Consumers Australia's website.

Keep your eyes peeled in early October for the next edition of Energy Dispatch (don't forget to subscribe!).

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