Demand management incentive scheme and innovation allowance mechanism

  • Accepting submissions
Demand management incentive scheme
Date initiated: 
5 August 2016
Effective date: 
31 October 2017
General inquiries - Demand management
AER reference: 


The AER has published draft versions of its new demand management incentive scheme and innovation allowance mechanism. The scheme and allowance mechanism will complement our ongoing reforms targeting consumer choice and more efficient network pricing outcomes. These include our work on tariff reform, metering contestability, ring-fencing and a rule change to strengthen the transparency and efficiency of replacement expenditure.

The scheme’s objective is to provide electricity distribution businesses with an incentive to undertake efficient expenditure on non-network options relating to demand management. The separate allowance mechanism’s objective is to provide distribution businesses with funding for research and development in demand management projects that have the potential to reduce long term network costs.

Our draft scheme and allowance mechanism is the product of extensive collaboration with stakeholders. At the start of 2017, we received submissions on a consultation paper to inform the development of a robust, best practice scheme and allowance mechanism. This was followed up with a demand management Options Day workshop on 6 April 2017 and a Directions Forum videoconference on 29 June 2017.

After we receive submissions on our draft scheme and allowance mechanism, we will hold a stakeholder forum in to discuss these views. This will help us finalise a robust scheme and allowance mechanism in December 2017.

Request for submissions

On 28 August 2017, we published the draft scheme, allowance mechanism and accompanying explanatory statements. We also published consultation paper to seek stakeholder views on a proposed rule change that will allow us to apply the scheme to distribution businesses earlier.

We are inviting written submissions on these publications by the close of business Thursday 12 October 2017 to:

We prefer that all submissions be sent in an electronic format in Microsoft Word or other text readable document form and publicly available, to facilitate an informed, transparent and robust consultation process. Submissions should be emailed to (link sends e-mail).

Alternatively, submissions can be sent to:

Mr Warwick Anderson
General Manager, Network Finance and Reporting
Australian Energy Regulator
GPO Box 3131

Canberra  ACT  2601

Submissions will be treated as public documents and posted on our website unless prior arrangements are made with us to treat the submission, or portions of it, as confidential. Those wishing to submit confidential information are requested to:

  • clearly identify the information that is the subject of the confidentiality claim; and
  • provide a non-confidential version of the submission.