According to a new Energy Networks Australia report, incentive-based energy regulation schemes are delivering more than $6 billion of benefits to customers.
The Rewarding Performance: How Customers Benefit from Incentive-based Regulation report, released in Brisbane as part of Energy Networks Australia’s Regulation Seminar 2019, is the first comprehensive analysis of the schemes’ performance.
Energy Networks Australia CEO, Andrew Dillon, said that the report clearly demonstrated that incentive regulation was working for customers.
“A stable framework of incentive-based regulation encourages energy networks to continue to reduce costs and improve services – benefits that this report quantifies in savings to customers.
“Under this system a customer with gas and electricity is better off by more than $650, while an electricity only customer will benefit by more than $500.
“Incentive-based regulation makes improving efficiency and service good for customers and good for industry.
“Aligning customer and network interests is a strength of the current regulatory framework and should be a foundation stone for regulation going forward.”
Mr Dillon said the incentive-based framework underpinned the strong productivity improvements demonstrated by Australian network businesses, most recently reported in the Australian Energy Regulator’s latest Annual Benchmarking Report.
This found electricity distribution networks’ increasing overall productivity by 2.7 per cent in 2016-17 and transmission networks by a record-breaking 5.8 per cent.
Mr Dillon said the benefits outlined in the report were conservative as they did not include recent operating efficiencies made by networks and were calculated on high interest rates.
“Using current financing costs and interest rates, we estimate 81 cents of every dollar of efficiency gains made by networks ends up in the pocket of consumers,” he said.