Good morning everyone. It is my pleasure to welcome you all to the 2018 ACCC and AER Regulatory Conference. For those of you who do not know me, I am Paula Conboy, Chair of the Australian Energy Regulator.
I would like to begin today by respectfully acknowledging the Turrbal People as the Traditional Owners of the land where we gather today.
I pay my respect to Elders past and present and to emerging community leaders. I also extend respect to all Aboriginal and Torres Strait Islander people here today.
I liken this conference to a big regulation-family reunion. It's good to see so many familiar faces back again, as well welcome some new ones.
In true family reunion fashion, this time away from our desks is an opportunity to catch up with each other, share stories and experiences, not only through the panels and breakout sessions, but over a significant amount of food as we indulge in the customary 5-meals-a-day conference diet.
And looking at the agenda, I have no doubt we'll all roll out the doors tomorrow afternoon well-fed and well-informed!
The theme of this year's conference is New Frontiers in Regulation. Over the next two days we will be hearing from an impressive array of local and international experts on this topic.
What are these new frontiers? And what challenges and opportunities do they bring for regulators, policy makers, consumers and industry?
Innovation, disruption and new technology—these new frontiers have impacted many, if not all, regulated sectors.
Not only are we grappling with its implications in the energy sector, which I regulate, but my colleagues at the ACCC and elsewhere, are debating how best to regulate emerging sectors, like digital platforms and other intangible assets.
Do we need a different approach from how we regulate physical assets like the ‘poles and wires’ I am used to? This will be the focus of the second session today.
Similarly, later today we will be exploring the impact of changing technology on “last resort” providers – how, and to what extent, has the emergence of new competitive technologies undermined the viability of businesses with last resort provider obligations? Again, an issue for many regulated sectors, particularly telecommunications, post and increasingly – electricity.
After lunch we will then consider what economic regulation (if any) is appropriate for Private Public Partnerships and how to encourage efficient private investment in new infrastructure.
Then it is on to three issues of particular interest to me. First, the expanding role of consumers in regulation—an area of focus for the AER for some years now.
The growing demand for greater engagement, alongside the proliferation of data and consumer choice, are new regulatory frontiers of critical importance.
The AER is currently trialling a new way to engage with consumers as part of our ‘NewReg’ Project. This is a collaborative effort between the AER, Energy Consumers Australia, and Energy Networks Australia, aimed at ensuring customer preferences drive network businesses’ revenue proposals.
AusNet Services is trialling the ‘NewReg’ model for its Victorian electricity distribution network business, by establishing a Customer Forum to negotiate and agree key aspects of their revenue proposal.
If successful, the proposal AusNet submits to the AER next year should better reflect the preferences of AusNet’s customers—building trust and confidence in both the regulatory process and the outcomes it delivers.
Second, we have a session debating the role of regulators in public policy – definitely one I am looking forward to!
Third, tomorrow morning’s plenary session considers the new frontier of “post-LMR”. Will we see more collaboration or expanded judicial review? This is of particular relevance to energy sector.
Last year’s removal of limited merits review from AER decisions on network revenues provided an opportunity to help reset relationships. To move forward together. Whether you agree with the decision to abolish LMR, many would agree that the adversarial culture it created in network regulation wasn’t in anyone’s interest.
We all know that as regulators we must satisfy consumers and regulated businesses—in fact all our stakeholders—that we run rigorous, evidence-based processes, informed by extensive and genuine consultation.
With the removal of merits review, we have worked even harder to give consumers, networks and investors confidence in our decisions and in the energy sector as a whole. I get to chair this session and am really looking forward to the views of the panelists.
Our final session provides the opportunity for you to have your questions on these new frontiers answered by our speakers. Following last year’s success, we are again asking you to use the online tool, Slido, to submit and vote for questions. Instructions on using Slido are in the program.
It is this breadth across regulated sectors and focus on issues at the forefront of debates that makes this conference the highlight of the regulatory calendar.
While the conference will explore New Frontiers in Regulation, I’d like to spend a few minutes on an old but essential frontier—trust.
Earlier this year it was reported that trust in Australia has continued to decline, with trust at an all-time-low in many regulated sectors. A recent survey found that Australian power companies are trusted less than media companies, banks and telcos.
If we consider the energy sector briefly, the Australian Energy Market Commission’s June report on Retail Competition found that consumer trust had dropped from 50% in 2017 to 39% in 2018. With only 25% of consumers confident that the energy market is working in their long-term interests, down from 35% in 2017.
This is a worrying trend. And I think particularly so for regulators and regulated businesses.
Consumers must trust that the businesses they are buying goods and services from are not ripping them off, price-gouging, gold-plating or misleading them.
They must trust that the regulator will be an active and strong force protecting their interests. Working so they can be confident they are paying no more than necessary for regulated services. Ever vigilant, making sure markets deliver promised benefits.
Businesses and consumers must trust that the regulator has robust, transparent and accountable processes. That we are hearing and considering stakeholder views when our making decisions. Everyone must be able to see that matters and proposals under consideration have been thoroughly tested and that well-reasoned decisions are provided.
Trust builds confidence—confidence that the regulatory process is a good one and that following it will deliver the right outcomes.
I have already touched on some of the work of the ACCC and the AER that is focussed on rebuilding trust and confidence in markets and regulation.
I have two further examples I would like to highlight. The first is the work of my esteemed ACCC colleagues on their Retail Electricity Pricing Inquiry. It recently delivered 56 recommendations seeking to restore electricity affordability and rebuild consumers’ trust that these markets can work in their interests. The AER worked closely with the ACCC over the course of this inquiry and this is an important step towards more trust and confidence in energy markets.
Whilst we await the response from Governments, we at the AER have continued to promote and work on our Energy Made Easy price comparison website. We are making it easier for customers to search for, compare, and understand energy offers available. We will be launching the revamped site in coming weeks.
We know that trust and confidence—the old frontiers—are critical success factors for businesses, regulators and regulation. They are also intrinsically linked to these new frontiers.
Regulators and regulation must keep up with the pace of transformation and change. And with innovation, disruption and new technologies.
A recent report from PA Consulting suggests there is a risk that if we don’t, businesses will lose revenue and consumers will lose choice. This in turn leads to a loss of confidence and trust in regulators that, once gone, is hard to win back.
The good news is that these old and new frontiers are applicable to all regulated sectors, so we can always learn from each other.
For example, while the proliferation of data will make it easier to engage with consumers, regulators will also need to come to grips with the challenges it brings—access and consumer’s right to their data; confidence in privacy protections; blockchain mechanism and so on. These are issues relevant to financial services, energy and telecommunications and the focus of many regulators in the room.
Just before I hand over to Cristina I’d like to thank you all for taking the time to join us, particularly those who had a long journey to get here and those who made today possible. I look forward to catching up with many of you, and to the invaluable contributions you will undoubtedly make to the discussions and debates over the next two days.
Now, all the best family reunions start with an update from the overseas relatives, and we have three such regulatory family members to do just that for us this morning—brother Mar, cousin David, and uncle Bill; We look forward to hearing your stories from overseas as part of our first panel.
Enjoy the next two days with your regulatory family. Take the opportunity to catch up with long-lost relatives, meet some new ones, and tap into the vast wealth of knowledge gathered here.
I’ll now hand over to Cristina for the first panel. Thank you.