More efficient distribution network planning

11 October 2012

The AEMC today announced new obligations for electricity distribution businesses to publish demand side engagement strategies focussed on developing alternatives to network expenditure in the National Electricity Market (NEM).

The obligations are part of a package of reforms which create a NEM-wide framework for network planning and expansion – replacing current arrangements which vary across each state and territory.

AEMC Chairman, John Pierce, said today’s final rule determination establishes a clearly defined and efficient process for electricity distribution network investment which will support the efficient development of distribution networks.

“It is important for energy businesses to capture the value of demand side participation so that electricity services can be delivered at the lowest cost combination of efficient investment and the more efficient use of existing infrastructure.

“The rule we announce today will commence from 1 January 2013.

“It will facilitate greater transparency of business planning to identify and address future network needs; and provides more information to everyone in the market which we expect will encourage more meaningful consumer and stakeholder engagement in network development,” Mr Pierce said.

The final rule on a NEM-wide distribution network planning and expansion framework requires all distribution businesses to:

  • publicly release reports on future network requirements necessary to meet changing consumer demand;
  • engage with user groups and non-network power providers to explore non-network options, including demand side participation, as an alternative to network infrastructure investment. Demand side options can include peak shifting, electricity conservation, fuel switching and utilisation of distributed generation such as cogeneration units or residential solar;
  • follow a new project assessment process to determine the most efficient ways for network businesses to invest in supplying energy to the community.

This rule is one part of the AEMC’s broader work program to encourage timely and meaningful engagement between network businesses, consumers and other stakeholders. In addition to the new annual reporting and demand side engagement obligations placed on distribution businesses under this rule, our other work to enhance opportunities for engagement include two key projects. The power of choice review explores changes to help families and business make informed choices about the way they use electricity and manage their bills (final report due November 2012).  The AEMC’s network regulation rule change draft determination included proposals to encourage and reduce barriers to consumer participation in the regulatory determination process (final determination due November 2012).