New approach to network regulation being tested

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The Australian Energy Regulator (AER), Energy Consumers Australia and Energy Networks Australia have released an enhanced, more open approach to electricity network regulation to be tested via a trial with Victorian distribution network AusNet Services.

The NewReg approach aims to improve the efficiency and effectiveness of network regulation, increase consumer trust and confidence in the process, and deliver the outcomes that consumers most value when determining how much they pay for network services.

“NewReg represents an exciting alternative approach to network regulation, at a time when energy affordability is a key concern for consumers,” Australian Energy Regulator Chair, Paula Conboy, said.

“It involves the AER much earlier in the development of regulatory proposals, and shifts the focus towards understanding and incorporating consumer priorities well in advance of considering network revenue requests.”

The NewReg project will run a ‘live’ public engagement process throughout 2018, where consultation on the approach will happen in parallel with a ‘live’ trial to enable stakeholders to contribute to the development of the approach in real time.

Energy Networks Australia CEO, Andrew Dillon, said, “NewReg is about working with customers to make sure networks deliver the services they value. This trial reflects the next step in transparent engagement with customers about the best ways to deliver what they want from the evolving grid.”

AusNet Services will embark on the groundbreaking trial to negotiate its proposed service offerings and expenditure directly with highly-skilled, qualified individuals appointed to formally represent the perspectives of its customers.

As part of the trial they have established a Customer Forum, led by Victoria’s ex-Consumer Affairs Minister Tony Robinson which will engage with AusNet Services to ensure its plans deliver the services that its customers most value.

Its goal is to reach agreement on AusNet Services’ plans for the years 2021 to 2025 before they are lodged for formal assessment by the Australian Energy Regulator (AER) under the Electricity Distribution Price Review (EDPR) process.

The Customer Forum will be supported by AusNet Services’ existing Customer Consultative Committee – a group of representatives from a range of customer interests and community groups, which guides decision-making within the business – and an extensive customer research program.

“AusNet Services is committed to empowering communities and their energy future. The NewReg trial adds to our existing customer engagement activities that aim to place customers at the heart of our decision-making process by understanding what matters to them,” AusNet Services Managing Director, Nino Ficca said.

The trial involves the formation of a Customer Forum to represent AusNet Services’ residential, small business, commercial and industrial customers.

This new body is in addition to AusNet Services’ established and continuing customer consultation processes.

Once the revenue proposal is submitted, the AER will still make a determination in the long-term interests of consumers, within the existing rules.

The combined trial and consultation on the approach will enable the project partners to assess how effective it is in delivering a network revenue proposal where energy consumers’ preferences drive network decision-making about investment and operational priorities.

Energy Consumers Australia CEO, Rosemary Sinclair, said, “Network costs make up about half of household and small business electricity bills. With the significant increase in electricity prices over the past decade, it is critical to ensure network services are planned to meet consumers’ needs, as they see them.

“Consumers are in the best position to decide how they want to balance the need to reduce costs with reliability and new, innovative approaches to network management.

“NewReg is an important step toward putting consumers at the centre of decision-making about managing the network and making sure the fridge stays cold at lowest possible cost.”

The results would inform discussions about possible future changes to the National Electricity Rules. 

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