Energy Market Transformation Bulletin No 05 – Work Program Update

Publication date: Thursday, 03rd August 2017.

Background

The energy sector is undergoing a major transition, driven by changing technologies, increasing consumer engagement, new energy products and services. A key challenge of the transition is that existing regulatory frameworks were designed around a centralized system of electricity generation and distribution, and we are seeing a shift to a more decentralized one.

The Energy Council (Council) seeks to support the development of competitive electricity markets which foster innovation and customer choice. The Council also wants to ensure any potential risks from the market transition are mitigated, and that appropriate consumer protections are in place.

In December 2015, the Council established the Energy Market Transformation Project Team (EMTPT) to consider these issues.

Recent decision and future work

At meetings on 10 April and 14 July 2017, the Council considered officials’ policy recommendations for how key areas of work will be taken forward.

Consumer Protections

Ministers noted that while current consumer protections provided by the National Energy Customer Framework and Australian Consumer Law are generally sufficient for behind the meter (BTM) products, they considered an industry-led Code of Conduct would support consumer protections for customers acquiring new energy products and services.

Ministers agreed to write to representative industry groups asking industry to lead the development of a Code of Conduct for new energy products and services. While there are clear benefits in industry taking the lead, ministers may reconsider whether further regulatory intervention is required in the future.

Ministers also considered that consumers would benefit from improved information that explains the laws and protections that apply in different supply arrangements. Energy Consumers Australia have been asked to develop a range of information products such as facts sheets, infographics and online tools.

Ministers further noted that consumers may consider removing their grid connection after purchasing a BTM electricity system. The decision to disconnect is a complex one and consumers should be aware of the consequences and risks.

Ministers agreed to request Energy Networks Australia to coordinate the development of consumer information that can be consistently provided across all network service providers.

This information should prompt consumers to be aware of changes in availability or reliability standards, changes in consumer protections, the potential cost of reconnecting to the grid in future, and other relevant information.

Consumers are offered greater choice with the expanding range of energy services and products, however there is a risk of some consumers getting products that don’t meet their needs or offer poor value. Ministers agreed to request the Australian Competition and Consumer Commission prioritises the investigation of predatory practices of BTM sellers, and monitor other consumer protection issues related to the provision of BTM energy services.

Stand-alone Power Systems

Ministers agreed that consistency is desired in jurisdictional frameworks for the regulation of stand-alone power systems. Therefore, Ministers agreed EMTPT should engage with relevant jurisdictional bodies and regulators and the Australian Energy Regulator to develop a best practice model for jurisdictional regulation of ‘off-grid’ stand-alone power systems.

Ministers further agreed to EMTPT developing a proposal for changes to the national framework to address regulatory gaps for transferring from grid connected energy services to stand-alone power systems and relevant regulatory arrangements. EMTPT will consult with stakeholders in developing this scope of work.

Battery Storage

Consistent with the Finkel recommendation for improved information on distributed energy resources (DER) and based on findings of a cost-benefit analysis, Ministers agreed to initiate the development of a national register for DER (solar generation and batteries) to be administered by the Australian Energy Market Operator (AEMO). A rule change proposal is to be developed by end August 2017 and the register to commence operation by end 2018.

Ministers noted that the rule change proposal may include revising rules for customer connection and/or retail contracts to clarify the information customers provide to distributors and/or retailers about DER to provide a default national data collection option where jurisdictional arrangements are not in place.

Ministers also agreed officials should work with AEMO to prioritise development of a standard format for collection of data on DER.

As an interim measure ahead of establishing the national register, Ministers noted officials will work with stakeholders, including network businesses, installers, AEMO and the Clean Energy Regulator to increase data collection of DER, particularly storage equipment, which can be fed into the register once it is established.

Network Regulation – Optimising network incentives

The EMTPT has commenced a project looking at existing and alternative regulatory incentive frameworks that may improve flexibility and encourage innovation and efficiency in electricity network investment.

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