National Framework for Reliability Standards

Publication date: Thursday, 11th December 2014.

Rising electricity prices have been and continue to be a major focus for customers and policy makers in the National Electricity Market (NEM). A fundamental driver has been the costs of electricity distribution and transmission network infrastructure, which accounts for a substantial proportion of customer electricity bills. A variety of factors have contributed to the escalating network costs. An important parameter affecting network costs is the standards to which network infrastructure must be planned, designed, built and maintained. 

These standards, referred to broadly as “reliability standards”, are intended to limit the impacts on customers of supply interruptions. Simply put, reliability standards, however they are set or expressed, are the determinant of the amounts of capital and operating expenditure a network business must undertake to avoid or manage outages.

Consumers of electricity, whether large or small, place a high value on being confident of a reliable supply of electricity, that is, experiencing a minimal number and length of blackouts.

To maintain or improve the level of reliability requires investment in powerlines and other network infrastructure, in order to meet growing demand (particularly during peak times) and for the replacement of ageing assets.

The costs associated with this investment get passed on to consumers through their electricity bills. Consequently, whether explicitly or implicitly, reliability standards involve a trade-off between the cost and inconvenience of supply interruptions and the cost of electricity supply.

Reliability standards for transmission and distribution networks have been the subject of review by the Australian Energy Market Commission (AEMC) since 2007.

The former Standing Council on Energy and Resources tasked the AEMC with providing advice to jurisdictions on common definitions for distribution reliability requirements as part of its 2012 Energy Market Reform package, and as set out in its final report for its Review of the National Framework for Distribution Reliability. The advice would also be used by the Australian Energy Regulator to establish values of customer reliability to be applied when setting reliability requirements for the next round of regulatory determinations commencing in mid-2019.

The AEMC provided this advice in November 2013. The Council's December 2014 response to the advice as well further background information is provided below.