AER releases annual assessment of Demand Management Innovation Allowance expenditures by non-Victorian electricity distributors for 2018–19

The Australian Energy Regulator (AER) today released its assessment of the annual expenditure claims for 2018–19 made by non-Victorian electricity distributors under the current Demand Management Innovation Allowance (DMIA) scheme. The AER has approved $3.7 million of expenditure by these Distribution Network Service Providers (DNSPs) on 39 demand management projects.

The DMIA scheme funds research and development projects to be tried by distributors to reduce or shift customer demand in order to avoid or defer network augmentation. The projects may target a reduction in peak demand or broad-based demand. Where projects are successful, they are able to be incorporated into business as usual management practices for DNSPs. This reduces the reliance on more costly infrastructure and thereby reduces network charges.

Our assessment provides insights into the total value of expenditure approved and the type of projects the scheme has delivered. The projects varied in both their nature and scale. In the most recent period, 37 per cent of expenditure relates to battery storage (residential, commercial, or grid), 20 per cent on research and 12 per cent on air-conditioner load control.

The allowance is provided to each DNSP in the form of a fixed allowance for each regulatory period. If distributors do not spend their DMIA in full, the underspent amount is deducted from the expenditure allowance for the next regulatory period. If the allowance is overspent, the distributor must meet the higher expenditure itself and cannot recover this from its customers. In the recent period, NSW and ACT distributors are required to return about $4.4 million to their customers.

This assessment covers expenditure in 2018–19 for non-Victorian DNSPs. All of the expenditure claimed by these DNSPs met the DMIA criteria and has been approved. DNSPs in Victoria, who report on a calendar year basis, will report on their 2019 period by the end of April.

For more detailed information about the projects, please refer to each distributor’s DMIA report.

Issued date: 
6 May 2020
AER reference: 
AC 52/20
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