The Australian Energy Market Commission (AEMC) has today unveiled its final rules governing the economic regulation of energy network service providers.
The Minister for Resources and Energy, Martin Ferguson AM MP, welcomed the new rules which will enhance the way the regulator assesses network revenue requirements and should lead to better outcomes for consumers overtime.
“In recent years consumers have faced significant increases in their electricity bills due largely to the need to upgrade and replace ageing network infrastructure in order to ensure a continued reliable supply of electricity,” Minister Ferguson said.
“The new rules make important changes to the way these costs are managed and balance the need to provide sufficient investment to maintain reliability while minimising costs to consumers.
“The rules will better equip the regulator to set network prices to make sure that consumers don’t pay more than is necessary for a reliable supply of electricity.
“This includes giving the regulator greater powers to interrogate submissions and undertake benchmarking and reporting on the relative efficiency of electricity network businesses. Significantly they will also change how the rates of return on capital are set, a major driver of costs for consumers.
“Importantly, this has been an independent process that has undergone extensive stakeholder consultation and conducted at arms length to Government.”
The rules do not require government approval and are expected to be introduced by the AEMC on 29 November 2012.
“This means the new rules will apply to the next round of network determinations, beginning in New South Wales and Australian Capital Territory in mid-2013 and are expected to flow through to the price consumers pay for electricity from mid-2014,” Minister Ferguson said.
Consumers in NSW and ACT will be the first to benefit from these changes, with other states to follow.
The new rules form part of a broader package of energy market reforms, highlighted in the Australian Government's Energy White Paper, to promote better outcomes for consumers.
The Australian Government, along with states and territories are working cooperatively through the Standing Council on Energy and Resources to deliver this comprehensive package of reforms to the Council of Australian Governments in December.
For further information see www.aemc.gov.au.