Substantial reforms to the National Electricity Market (NEM) have been recommended to Commonwealth and state governments by the Australian Energy Market Commission (AEMC) in its final report of the Power of Choice Review – giving consumers options in the way they use electricity.
The recommendations include changes to the National Electricity Rules (NER), the National Energy Retail Rules and several government programs to provide the information, technology and price options, which households, business and industry can use to manage their electricity use and expenditure.
Residential consumers may make savings, in the short term, if they choose to change their retail price offers and adapt consumption patterns.
The 18 month review today released recommendations and a proposed implementation plan to give consumers real choice about how they use electricity and what they pay.
AEMC Chairman, Mr John Pierce, said the package of reforms would enable the electricity market to meet the needs of consumers over the next 15-20 years.
“The reforms provide more opportunities for consumers to make informed choices based on the benefits that end use services provide. Ultimately, consumers are in the best position to decide what works for them.
The overall benefits to the system will be realised through the choices that consumers make.” Mr Pierce said.
AEMC recommendations propose:
– More flexible electricity pricing to better reflect the costs of electricity supply at different times.
– Price incentives for consumers who choose to change their consumption patterns, with safeguards for consumers with limited capacity to change their consumption.
– A review of existing arrangements to make it easier for consumers to switch between electricity retailers.
– Encouraging commercial investment in the technology that enables flexible pricing options and other demand side participation products.
– Rewarding commercial and industrial energy users for changing their consumption patterns.
– Improving consumer access to electricity consumption data to enhance understanding of their energy use.
– Clarifying the role of third parties providing energy management services to improve competition and robust consumer protection.
– Incentives for networks to consider demand side projects in lieu of infrastructure investments.
– Allowing consumers to sell energy they generate (eg. solar, embedded generation, battery storage) to parties other than their retail electricity supplier.
A comprehensive awareness program to help consumers to make informed decisions about their electricity consumption is recommended prior to the implementation of pricing and metering reforms.
The Power of choice review is a combined State, Territory and Commonwealth government initiative through the Standing Council on Energy and Resources (SCER). The final report, together with a detailed implementation plan, is with SCER ministers for consideration.
Mr Pierce said most recommendations could be implemented with changes to the rules governing energy market regulation; others require decisions or legislative change by the relevant governments.
For information contact: AEMC Chairman, John Pierce (02) 8296 7800
Media: Communication Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817
The AEMC is working across the electricity supply chain to identify areas where changes can be made to reduce electricity costs for consumers. Our work includes new rules to give the regulator more power to set network price increases; the Transmission Frameworks Review to promote cost-efficient investment in energy generation and networks; and reviews about the level of reliability consumers are prepared to pay for. For details of the AEMC work program, see www.aemc.gov.au.