Market Review: Open

Overview

The annual review of the economic regulatory framework for electricity networks is part of the AEMC’s work to support the continual evolution of the energy sector.
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The annual review of the economic regulatory framework for electricity networks is part of the AEMC’s work to support the continual evolution of the energy sector. In light of the significant growth in decentralised energy resources, the review examines whether the economic regulatory framework is robust, flexible and continues to support the efficient operation of the energy market in the long term interest of consumers. 

For the 2019 Review the AEMC will be consulting separately on two separate workstreams and will include advice and recommendations for both in its final report. 

Workstream one: network incentives and market development
This workstream is part of the AEMC’s ongoing program to support the continual evolution of the energy sector. 

On an annual basis and under terms of reference from the COAG Energy Council, the Commission monitors key trends in grid usage as well as development and uptake of new technologies and business models.

For the 2019 Review, the Commission will commence consultation on alternative approaches to network service provider expenditure assessment and remuneration - as recommended by the Finkel Review. This follows on from the Commission’s finding in the 2018 Review that incentives are not aligned and, in certain circumstances, a strong capital expenditure bias exists.  

The 2019 Review report will also provide a centralised repository of information and an update on the various workstreams supporting efficient investment in decentralised energy resources.

The AEMC has published an approach paper seeking stakeholder feedback on the range of potential solutions available to address the issue of capital expenditure bias. Submissions are requested by 14 February 2019.

Workstream two: regulatory sandboxes
As part of the 2019 Review, the COAG Energy Council has requested the AEMC to examine regulatory sandbox arrangements and how to best facilitate coordination of proof-of-concept trials. A "regulatory sandbox" is a framework within which participants can trial innovative business models, products and services in the market under relaxed regulatory requirements at a smaller scale, on a time-limited basis and with appropriate safeguards in place.

The AEMC will also consider the need for regulatory sandbox arrangements in other parts of the national electricity framework, for example relating to wholesale electricity markets and consumer protections.  Interim advice will be provided to COAG Energy Council by February 2019.

The AEMC has published a consultation paper seeking stakeholder feedback. Submissions are requested by 31 January 2019.

If the need for sandbox arrangements is established, the AEMC’s advice on the design of these arrangements will be consulted on and included in the 2019 Electricity network economic regulatory framework review final report.

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