Helping energy shoppers get more engaged and better informed
The price of energy is one of the most important inputs to the economy and it’s important to develop a competitive market for new energy services so consumers have more choices in managing their energy bills.
We understand the community as a whole is very committed to exploring new technologies and renewable options. Our intention is not to hold this back, but to ensure consumers have the choices they want without putting costs burdens on households and the economy that could be easily avoided with better planning.
Above all our rules and reviews work to protect consumers, especially the most vulnerable, as the system changes.
New rules and reviews to protect consumers as the system transforms
Introducing maximum timeframes for meter installations – making retailers provide customers with new smart meters within a set timeframe. Customers typically need a new ‘smart’ meter when they install solar panels or when their old meter needs replacing.
Strengthening protections for customers in hardship – new obligations on retailers to implement effective hardship policies to help customers who are having difficulty paying their bills.
Estimated meter reads – making retailers accept meter reads provided by customers who think their estimated electricity or gas bill is wrong.
Advance notice of price changes – requiring energy retailers to tell customers about any price increases before they happen, and provide information on how to shop around for a better deal.
Advance warnings to shop around before energy discounts finish - energy retailers must notify their electricity and gas customers when benefits in their contract, such as a discount, are about to end or change.
Stopping electricity discounting that can leave consumers worse off – energy retailers are prohibited from offering energy deals deliberately designed to confuse customers with high base rates to make so-called discounts appear bigger than they actually are.
Strengthening protections for customers requiring life support equipment – builds on current rules to strengthen protections for customers that have a person requiring life support equipment residing at their premises.
Retail competition review – our annual retail competition reviews identify ways to improve consumer outcomes in retail energy markets. In our 2019 review we saw bill reductions and that simpler, cheaper deals are on offer for energy consumers as things starter to change. In addition to this we have also seen one in three customers taking their business away from the big three retailers, decreasing their market share.
Review of regulatory arrangements for embedded networks – In June 2019 we published a comprehensive package of law and rule changes to give embedded network customers access to the same rights, protections and prices as customers who are directly connected to the grid. This follows our 2017 review of the protections for the expanding number of electricity customers who live and work in embedded networks like green commercial precincts and apartment blocks, shopping centres and caravan parks.
Review of regulatory arrangements for stand-alone power systems - In May 2019 we recommended a range of regulatory changes to enable distribution network businesses to supply their customers with stand-alone power systems where it is cheaper than maintaining a connection to the grid. The reforms would provide consumers with the same protections, reliability standards and access to competitive retail offers via their retailer of choice as those connected to the grid. We are also consulting on development of a national framework for regulating stand-alone power systems provided by local councils, community groups, developers or other third parties. A draft report was published in June 2019.
Residential electricity price trends - The AEMC reports annually on price trends, looking at what is driving changes in household electricity bills. Understanding these drivers can help identify appropriate policies that enable the ongoing supply of reliable, secure energy at the best price for consumers.The 2018 Price Trends report was published in December.
Also see our consumer protection action plan.
Power of Choice reforms: laying the foundations for consumer participation
The AEMC has been working for several years on a series of reforms to make it easier for customers to engage in the energy market, as set out in the AEMC's Power of Choice review. These reforms include:
From 2017, as a result of the AEMC's new distribution pricing rules, the prices paid by households and businesses will better reflect the different ways they use electricity and the costs of providing it to them. The new rules are designed to give consumers the option of reducing their peak demand to save money, or continuing to use electricity at those times when the value they place on that use outweighs the costs.
Competition in metering
The AEMC’s 2015 Competition in metering reforms removed the networks’ effective metering monopoly – giving consumers more opportunities to access a wider range of electricity services.
The information and services available through advanced metering can make it quicker for consumers to switch retailers, allow them to decide how often they want to be billed, and provide them with better information about how they can change their electricity use to save money. Consumers can also benefit from more accurate meter reads.
These reforms also underpin innovation in energy retail markets so consumers can choose from a broader range of technologies, products and services to meet their specific energy needs.
The new arrangements took effect on 1 December 2017.
Rules to change processes that support Competition in metering include:
Review of electricity customer switching
In 2017 we made a rule to improve the accuracy of the customer transfer process by placing new obligations on electricity and gas retailers to resolve transfers that happen without customer consent.
Improving demand side participation information provided to AEMO
In 2015 the AEMC made a rule to enable AEMO to obtain better information on demand side participation information from electricity market participants to inform its forecasts.
Customer access to information about their energy consumption
In 2014 the AEMC made a rule change to make it easier for customers to access their electricity consumption data from their retailer or distributor in an understandable format and in a timely manner. The new rule is designed to improve consumers’ awareness of their patterns of electricity use and enable customers to make more informed choices about electricity products and services.
Promoting consumer choices in the grid of the future
More people are connecting all sorts of equipment to their distribution networks. These are called distributed energy resources including batteries, rooftop solar, electric vehicles, and price-responsive appliances.
Regulation is currently flexible enough to support this integration especially as major changes in recent years have reduced network costs and introduced cost-reflective pricing so people can make the most of their own investments in local generation.
Our annual report on promoting efficient investment in the grid of the future analyses how the regulatory framework may need to change to support a grid with more decentralised, local renewable generation. Our 2019 review is assessing how financial incentives for network businesses could change to encourage networks to embrace new technology where it is the cheapest way to help manage the grid. We will work with the Australian Energy Regulator, Australian Energy Market Operator, Energy Networks Australia and other stakeholders to develop options for reform.
Changing the energy landscape with new rules for networks
The AEMC has made a number of changes in recent years to the rules to keep network costs as low as possible. These changes include:
- Making the AER responsible for establishing values of customer reliability which are used to develop reliability standards in networks and wholesale markets. Knowing the value customers place on having reliable electricity supports efficient investments in infrastructure and goes to the heart of making sure consumers don’t pay more than necessary.
- A new register of "smart" distributed energy resources (DER) that can inject power into the network either through direct generation or the active curtailment of load. The register will be established by AEMO and include information about what DER is connected where, and how it performs in different scenarios. The register will improve energy market participants' visibility over DER and in turn contribute to better decisions by network service providers, AEMO and other energy market participants about how to efficiently integrate DER into the grid.
- A Demand management incentive scheme that encourages network businesses to use innovative solutions to deliver network services. Alternatives to building more expensive poles and wires can include demand response and distributed generation (including rooftop solar and batteries) where these can address system constraints at the least cost to consumers. Over the long term, the scheme will promote more efficient investment in network services which will flow through to consumers as lower network prices.
- New transmission connection and planning arrangements that provide more choice, control and certainty for connecting parties, while at the same time making it clear that the incumbent TNSPs are accountable for providing a safe, reliable and secure transmission network.
- Facilitating a competitive market in behind the meter batteries and other distributed energy resources by limiting distribution network businesses’ ability to own and control these assets.
- Options to improve the coordination of generation and transmission planning.
We have also introduced a range of new tools and obligations requiring networks businesses to play a more active role in keeping the power system ‘secure” or operating within its technical limits.
Setting the foundations for network reform
Underpinning the improvements to network regulation is a long-term reform program to strengthen network regulation so that everyone from heavy industry to small consumers are able to make more informed decisions about how they use electricity.
In 2014 the Commission made new rules so network prices reflect the different ways people are using electricity and the actual costs of providing it. These rules put consumers in the driving seat for the first time – to keep pace with modern lifestyles. When prices reflect how much it costs to use electricity at different times consumers are able to make more informed decisions so they can choose energy services that are right for them – whatever technology changes lie ahead in the future.
This future power system will see new energy service providers offer more high-tech choices for consumers. More consumers will buy and sell energy in a dynamic way in response to price signals. In 2017 we considered how a competitive market for distributed energy resources might evolve and set out a vision in our Distribution Market Model report.
A competitive distribution market would enable consumers to optimise the value of their investments in distributed energy resources, but it will require considerable time to build. In the meantime there are a number of first steps we have recommended network businesses take right now to better understand how to integrate more distributed energy resources while continuing to meet their electricity service obligations to consumers.
How networks are regulated
Electricity networks, like water services and rail services, are a natural monopoly. The National Electricity Rules enable the Australian Energy Regulator (AER) to set the maximum revenues that electricity network businesses can charge.
In 2012 we made new rules about setting revenue allowances for networks using a regulatory approach based on business efficiency so that consumers don’t pay higher network charges than necessary for the reliable supply of electricity and gas.
These rules gave the AER additional tools and more discretion when setting network revenues. This included an enhanced approach on setting the rate of return; more tools to determine efficient costs for each regulated business; and incentives to improve business efficiency.
Read more about network regulation.