Strategic Assessment of Network Regulation

Publication date: Friday, 12th June 2015.

The growth of disruptive technologies and advances in energy storage (including electric vehicles (EVs)), combined with greater consumer engagement through demand response and distributed generation, could have major implications for the coordination and operation of electricity markets.

These developments raise the question of whether, against the backdrop of likely further structural changes to the economy, the current frameworks governing the economic regulation of electricity networks will continue to deliver in the long term interests of consumers, or whether they will hinder transformation in the sector.

In light of this, the Energy Council tasked officials to undertake a strategic assessment of the likely performance of the existing network economic regulatory model against potential future scenarios to test the adequacy of the current regulatory framework to deliver the National Electricity Objective in changing scenarios.

The objectives of this project were to:

  • Identify a limited number of likely market structures in 20 years (i.e. 2035);
  • Assess the effectiveness of the existing network regulatory framework to deliver the National Electricity Objective in light of a range of future scenarios; and
  • Advise the Energy Council on the outcome of the assessment and any need for further work.

Officials provided advice to the Council ahead of its July 2015 meeting. The Council considered the recommendations and tasked officials to further explore the implications of key issues that emerged from the initial stress-testing exercise. This piece of work is being considered as part of the Council's strategic work program to ensure regulatory frameworks are ready to cope with the effects of emerging technologies.

The advice to the Council, as well as further background information, is provided below.