Australian government’s Senate committee reports on electricity prices


Canberra, Australia — (METERING.COM) — November 6, 2012 – The Australian government’s Senate’s Select Committee on Electricity Prices has called for the introduction of cost reflective pricing for electricity consumers and for the rollout of smart meters for households and businesses in certain circumstances.

In a 210 page report, the Committee also calls for the Australian governments to fund and undertake a comprehensive consumer education and information campaign.

The report is intended to be complementary to other studies on electricity prices and to take advantage of a “window of opportunity” for reform to the electricity market. Its appearance is just days after a draft report from the Productivity Commission on the same topic.

According to the report inefficient over-investment in Australia’s National Electricity Market (NEM) network infrastructure is the most significant of the contributors to the recent large increase in electricity prices. The current regulation of the NEM creates a perverse incentive for network businesses to engage in inefficient over-investment.

To deal with this, the Committee makes a number of recommendations to ensure greater scrutiny of network business investment proposals by the Australian Energy Regulator (AER). These include adoption of new guidelines for assessing rates of return, changes to the National Electricity Rules (NER) to ensure more efficient financial forecasting, and greater guidance for tariff setting by network businesses.

The Committee also recommends – among the recommendations for reducing the impact of peak demand events on the system – that consumers, or authorized third parties, should be encouraged and allowed to sell their demand in the wholesale electricity market.

Many residential and commercial electricity consumers are installing embedded generation in their homes and businesses. However, network design, connection and cost barriers currently impede energy produced via embedded generation being fed into the grid.

The Committee also notes that most residential consumers are poorly informed when it comes to retail electricity arrangements, the price of electricity and how their electricity consumption impacts on their bill. Further, their interests are poorly protected and represented in the NEM. To address this, the introduction of the National Energy Customer Framework (NECF) is supported and all states and territories should adopt these model laws by July 1, 2013.

The establishment of a national consumer advocacy body to promote the interests of electricity consumers in NEM regulation and decision making is also recommended.