Power of Choice

As we discussed in our last post on the Embedded Network Manager role, substantial reforms to the National Electricity Market (NEM) are underway following recommendations to the state and federal governments by the AEMC’s (Australian Energy Market Commission) Power of Choice review. The purpose of the review is to ensure that the electricity market is giving consumers options in the way they use electricity.

The key outcome is to provide more opportunities for consumers to make informed choices about the way they use electricity based on the benefits that end-use services provide. Ultimately, consumers will be in the best position to decide what works for them.
The AEMC’s recommendations include measures to:

1. Reform distribution network pricing principles to improve consumer understanding of cost reflective network tariffs and give people more opportunity to be rewarded for changing their consumption patterns.

2. Expand competition in metering and related services to all consumers, putting greater discipline on competitive metering suppliers to provide services at efficient cost and consistent with consumer preferences.

3. Clarify existing provisions regarding the ability of the market operator, AEMO, to collect information on demand side participation to make its market operational functions more efficient.

4. Give consumers better access to their electricity consumption data.

5. Establish a framework for open access and common communication standards to support contestability in demand side participation end user services enabled by smart meters. This will support consumer choice.

6. Introduce a new category of market participant for non-energy services in the National Electricity Rules to facilitate the entry of innovative products for consumers.

7. Reform the application of the current demand management and embedded generation connection incentive scheme to provide an appropriate incentive scheme to provide an appropriate incentive for distribution businesses to pursue demand side participation projects which deliver a net cost saving to consumers.

8. Establish a new demand response mechanism in the wholesale market - option for demand side resources to participate in the wholesale market for electricity.

The critical element for customers in an embedded network is covered in point 2. The primary impact being that the change in regulation is designed to make it easier for customers to exit an embedded network. The impact of this change will vary from network to network, with potential metering changes and pricing reviews. The major requirement is the appointment of the Embedded Network Manager as discussed in our last post. {LINK}
It will be important for each embedded network to work with their Embedded Network Operator to ensure that all customers have access to competitive retail pricing to avoid the prospect of a customer leaving the network.