The Demand Management Incentive Scheme (DMIS) encourages distribution businesses to find lower cost solutions to investing in network solutions. The incentive scheme achieves this by providing distribution businesses with financial incentives to undertake efficient expenditure on non-network solutions to manage peak electricity demand.
The DMIS has three key features:
- Cost uplift – This gives DNSPs a financial incentive of up to 50% of their expected costs of efficient demand management projects.
- Net benefit constraint – The size of the incentive must not outweigh the value (or net benefit) the demand management project delivers across the electricity market. The DNSPs will estimate the net benefit of projects – for large projects, DNSPs will do this through the regulatory investment test; and for small projects, they must use the cost–benefit analysis method prescribed by the scheme.
- Overall incentive constraint – The total incentive in any year cannot exceed 1% of the distributor’s allowed revenue for that year.
The DMIS applies to distribution business’ eligible projects as set out in the AER’s distribution determination for each distribution business. To receive an incentive payment, the distribution business must report on their projects to us. The business must provide information on how they are using demand management to deliver value to their consumers. The business must also tell us what demand management projects are underway or have contracts, along with the outcomes of these projects. We use this information to make incentive payments and to understand the key outcomes of our incentive scheme.
Outcome 2021–22 and 2020–21
We are responsible for assessing the annual DMIS compliance reporting of the DNSPs for calculating the incentive payments for each DNSP each regulatory year.
We have approved DMIS incentive payments for 2020–21 of:
- $8,500 for Ausgrid
- $168,947 for United Energy
We have approved DMIS incentive payments for 2021–22 of:
- $263,683 for AusNet Services
- $153,460 for United Energy
- A summary report on our assessment of how the DNSP utilised the DMIS to reduce cost and provide net benefits to consumers.
- Each DNSP's annual submission on their DMIS projects.