Final determination made on network regulation rule changes

29 November 2012

The AEMC today published its final determination and final rules on the regulation of electricity and gas network prices.

The AEMC’s final position published on 15 November 2012 has been confirmed. Implementation arrangements have now been included in the rules to set out how they will apply to specific businesses.

In short, the new rules give the regulator additional tools to set maximum prices which network businesses can charge. The rules improve the strength and capacity of the regulator to determine network price increases so consumers don’t pay more than necessary for reliable supplies of electricity and gas.

The new rules take effect immediately. They will be applied by the regulators, subject to the implementation arrangements, the next time the regulator makes a determination for a particular business.

AEMC Chairman, John Pierce, said the new rules were focused on improving the AER’s capacity by giving it an enhanced toolkit to determine efficient costs for each regulated business – and enabling it to decide what costs are efficient.

“These new rules will enhance the AER’s ability to set efficient costs,” Mr Pierce said.

“In line with the timetable for price and revenue determinations, the new rules will be applied starting with the New South Wales businesses in 2013. This means that from 1 July 2014 the new rules will start to have an impact.”

In addition to these rule changes, the AEMC is working across the electricity and gas supply chains to identify other areas where changes can be made to improve the efficiency of the total system. This work includes looking at ways for consumers to have more control over the way they use electricity and the prices they pay through our Power of Choice review. The Transmission Frameworks Review is looking at ways to reduce long-term price pressures. The Reliability Standards Review has suggested there is merit of moving to a national framework for distribution reliability standards. Advice on all of these areas is being provided to governments.

 

29 November 2012

For information contact:

AEMC Chairman, John Pierce (02) 8296 7800

Media: Communication Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817