The Australian Energy Market Commission has started consultation on a rule change request that raises important questions about incentives for transmission network businesses to pursue demand management projects, as an efficient alternative to network capital investment.
A consultation paper has been published by the Commission to facilitate public consultation on the rule change request and to seek stakeholder submissions.
Energy Networks Australia proposes to introduce a Demand Management Incentive Scheme and Demand Management Innovation Allowance to apply to transmission networks. These schemes provide for incentive payments to the networks to undertake efficient expenditure on non-network options, and funding for research and development on demand management projects respectively. Both schemes currently apply to distribution networks.
Energy Networks Australia considers that the proposed rule change would promote innovation and create positive incentives for transmission network businesses to undertake demand management approaches, which would benefit customers through lower transmission network and total system costs.
The Commission is seeking submissions to inform whether the benefits of introducing a Demand Management Incentive Scheme and Demand Management Innovation Allowance to transmission are likely to outweigh the upfront costs to consumers. Further, the Commission will consider whether the proposed rule change would improve the flexibility and responsiveness of the regulatory framework to facilitate the ongoing transformation of the energy sector due to change technologies and consumer preferences.
Submissions are due on 11 July 2019. The Commission intends to make a draft determination by 19 September 2019.
Media: Prudence Anderson, Communication Director, 0404 821 935 or DL (02) 8296 7817.