The AEMC today called for public submissions on a rule change request that would make the Australian Energy Regulator responsible for calculating values of customer reliability (VCR).

VCRs indicate the value different types of customers place on having reliable electricity supply under different conditions.

They are a key input in determining the reliability standard and settings for both transmission and distribution networks, and wholesale markets. In the national electricity market, VCRs have only been estimated a limited number of times, with no single body responsible. This has led to variations in both the methodology and the resulting VCRs.  

This rule change request, submitted by the COAG Energy Council, would require the AER to assume responsibility for calculating VCRs including:

  • developing a single methodology that can be used for estimating VCRs
  • updating VCRs at least every five years
  • adjusting VCRs on an annual basis by an appropriate methodology
  • undertaking public consultation when making any changes to the VCR methodology
  • publishing any changes to VCRs 
  • having regard to the current and potential uses of VCRs, and reflecting the range and geographic locations of customers when developing the VCR methodology.

The AEMC considers this to be a non-controversial rule change proposal and is proceeding under an expedited process, with a final rule due in July 2018.
Subject to any objections to the expedited process, this will be the only round of consultation. Objections to use of the expedited process must be lodged by 24 May 2018. Submissions on the consultation paper are due by 7 June 2018.

Media: Prudence Anderson, Communications Director, 0404 821 935.

BACKGROUND

Developing values of customer reliability 
Understanding how customers value reliability is an important consideration when planning new electricity infrastructure. A reliable supply of electricity is important to everyone: electricity interruptions can be costly, but it can also be disproportionately expensive to try to avoid them completely. 

The key is to strike a balance between delivering secure and reliable electricity supplies, and maintaining reasonable costs for electricity customers. 

A value of customer reliability (VCR) measure, represented in dollars per kilowatt-hour, indicates the value different types of customers place on having reliable electricity supplies under different conditions. VCR surveys can therefore help guide electricity planning and decisions on investments by energy businesses, governments and regulatory authorities.