AER begins review of incentive schemes for regulated networks

The Australian Energy Regulator (AER) today released a discussion paper on our proposed approach to reviewing the operation of incentive schemes that apply to regulated electricity and gas networks.

We regulate the revenues and prices of these monopoly networks in Australia, to ensure consumers pay no more than necessary for the services.

Incentive schemes form an important part of our regulatory toolkit. They provide financial rewards and penalties to network service providers, encouraging them to improve the efficiency of running their business over time and provide levels of service performance that are valued by customers.

We are reviewing and refining our incentive schemes and guidelines to ensure they remain relevant and fit-for-purpose, in line with our strategic objective to be more efficient and focusing on outcomes that matter most to consumers.

This discussion paper is the first step in seeking views from consumers and network service providers about the incentive schemes. The discussion paper:

  • provides an overview of the incentive-based regulation and the role of incentive schemes in promoting the long-term interests of consumers
  • sets out of proposed priorities and key focus areas for review
  • seeks views from all stakeholders on whether the incentive schemes are delivering the intended outcomes to customers and are fit-for-purpose.

We aim to complete out review by the third quarter of 2022. We will publish a draft decision in mid-2022 that set out our findings and proposed next steps. This will reflect stakeholder views provided in response to this discussion paper. We will hold workshops in the first half of 2022 to discuss key issues raised by stakeholders.

Invitation for submissions

We invite energy consumers, network service providers and other interested parties to make submissions on this draft guidance note by close of business 11 March 2022.

Submissions should be emailed to incentivereview@aer.gov.au. Alternatively, you may mail submissions to:

Sebastian Roberts
General Manager, Network Expenditure
Australian Energy Regulator
GPO Box 3131

Canberra, ACT, 2601

We prefer that all submissions be publicly available to facilitate an informed and transparent consultative process. We will treat submissions as public documents unless otherwise requested. All non-confidential submissions will be placed on the AER's website. For further information regarding the AER's use and disclosure of information provided to it, see the ACCC/AER Information Policy.

We request parties wishing to submit confidential information:

  • clearly identify the information that is the subject of the confidentiality claim
  • provide a non-confidential version of the submission in a form suitable for publication.
Issued date: 
2 December 2021
AER reference: 
AC 186/21
Contact: 
AER General Inquiries AERInquiry@aer.gov.au