The AEMC today called for public submissions on a consultation paper which details a proposal for changes to the way network reliability is regulated and delivered.

The paper seeks feedback on proposed frameworks which take account of the trade-off between the cost of investing in networks, and the value placed on reliability by customers.

The level of spending on transmission and distribution networks to meet the reliability standards set by jurisdictions around the nation feeds into overall cost levels and ultimately affects the electricity prices paid by households and business.

AEMC Chairman, John Pierce, said today that consultation with stakeholders to this point had assisted in developing progressive economic frameworks for determining reliability standards.

“We now invite further scrutiny and debate about the proposed frameworks,” Mr Pierce said.

“In particular we want to explore what information is required to ensure that transparent, evidence-based decisions can be made efficiently to provide reliability levels consistent with the price that customers are willing to pay,”

“Our focus is on how to implement an approach for expressing, setting and reporting on required network reliability levels and outcomes.

“Under the proposed frameworks reliability levels would be set every five years prior to each network business’ revenue reset. The Australian Energy Regulator (AER) would then be required to determine the prices and revenues that are consistent with the efficient delivery of those reliability levels over the regulatory period.

“The proposed frameworks would help the AER benchmark reliability performance across different network businesses, which would enable it to hold businesses accountable for their performance.

“While it is appropriate for reliability levels to reflect the different needs of each jurisdiction we are looking to improve the process so that reliability performance can be effectively compared.

“The proposal also allows jurisdictions to account for local conditions such as the need to consider additional requirements for customers in areas with poor reliability levels.”

This review was requested by COAG’s Standing Council on Energy and Resources as part of the energy ministers’ continuing focus on ways to improve market efficiency so that customers don’t pay more than necessary for their energy services.

For information contact:

AEMC Chairman, John Pierce (02) 8296 7800

Media: Communication Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817

12 July 2013