Rule Change: Completed

Overview

On 5 July 2018, the Commission made a final rule to make the Australian Energy Regulator (AER) responsible for calculating values of customer reliability (VCR) estimates.  VCR estimates play an important role in balancing the need to deliver secure and reliable electricity supplies and maintain reasonable costs for electricity consumers.  This rule requires AER to develop a VCR methodology, and calculate the first VCR estimates under that methodology by 31 December 2019. 
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On 5 July 2018, the Commission made a final rule to make the Australian Energy Regulator (AER) responsible for calculating values of customer reliability (VCR) estimates.  VCR estimates play an important role in balancing the need to deliver secure and reliable electricity supplies and maintain reasonable costs for electricity consumers.  This rule requires AER to develop a VCR methodology, and calculate the first VCR estimates under that methodology by 31 December 2019. 

The final rule will help remove unnecessary duplication and decrease the administrative burden both for bodies calculating VCRs, and for stakeholders contributing to their development.  It does this by assigning responsibility to one body to develop the VCR methodology and calculating VCR estimates. Additionally transparency, accountability and certainty will be improved by establishing timeframes, a VCR objective, and an overarching process for developing and reviewing the VCR methodology that will be used to calculate VCR estimates, along with publication requirements.

Background

The AEMC received this rule change request from the COAG Energy Council on 22 December 2017.

VCRs indicate the value different types of customers place on having reliable electricity supply under different conditions, measured in dollars per kilowatt hour. VCRs play an important role in deciding and delivering a range of standards, settings and other policy parameters in the NEM. For example, VCRs are used by the Reliability Panel in deciding whether the reliability standard and settings are appropriate and by the AER and network service providers when planning and regulating network infrastructure.

To date, VCRs have only been estimated a limited number of times, with no single body responsible for determining VCRs. This has led to variations in both the methodology and the resulting VCRs in previous estimations. 

The COAG Energy Council considered the proposed change to the National Electricity Rules would lead to benefits through nationally consistent VCRs, improvements to the VCR methodology, and assist the AER in carrying out its regulatory functions.

The rule change process and consultation

On 10 May 2018, the Commission published a consultation paper. Submissions to the consultation paper were due 7 June 2018. The Commission received 19 submissions in total.

The Commission assessed the rule change request to be non-controversial and carried out the rule change under the expedited rule change process, subject to any written requests not to do so. No objections to expedition of this rule change were received.
 

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