Australian Energy Regulator Chairman Andrew Reeves today outlined how the AER will address the challenge of integrating the consumer voice into energy network regulation. Mr Reeves spoke at the Energy Users Association of Australia’s 2013 National Conference in Brisbane.
“The AER is working to give consumers a greater voice in the regulatory process. Although network price reviews deal with inherently complex and technical issues, it is important to gain consumer perspectives to strike a better balance between a reliable energy supply and the need to minimise electricity costs,” Mr Reeves said.
“Effective consumer engagement can help build the Australian community’s confidence in the energy market, its regulation and the outcomes it delivers.”
Mr Reeves said that recent energy reforms have placed consumers at the centre of the energy market and made it easier for them to get involved in network determination processes. This includes a requirement on network businesses to engage with their customers and additional time allowed for stakeholders to prepare submissions.
In his speech, the Chairman outlined the AER’s consumer engagement strategy.
“The AER is more proactive and flexible in the way it consults with consumers, and is making it easier for consumer representatives to have an input without necessarily writing formal submissions.”
Mr Reeves said that in addition to the AER’s consumer engagement activities, the newly formed Consumer Challenge Panel will assist the AER in network price reviews.
“The Consumer Challenge Panel will give the AER greater confidence that consumer views, particularly those of residential and small business consumers, are being properly considered throughout the regulatory process.”
Mr Reeves highlighted how the Better Regulation program, initiated by the AER to implement recent energy reforms, is improving the way energy network businesses are regulated.
“As most are aware, inefficient over-spending on network infrastructure has been a cause of upward pressure on energy prices. Recent energy reforms address previous weaknesses in the regulatory framework.”
“They give the AER greater discretion to incentivise the network businesses to make investment decisions that are necessary, efficient and valued by customers. Improved penalties and rewards mean consumers will not have to pay for excessive investment.”
Additionally, the AER will use benchmarking to compare the relative efficiency of network businesses. Benchmarking is a way of determining how well a network business is performing against its peers, and provides valuable information on what is ‘best practice’. Inefficient networks will face cuts to their proposed expenditure.
“Consumers should only pay for the efficient costs of reliable electricity supply,” Mr Reeves said.