The purpose of the Productivity Commission’s (PC) inquiry was to inform the Australian Government about whether there are any practical or empirical constraints on the use of benchmarking of network businesses and then provide advice on how benchmarking could deliver efficient outcomes, consistent with the National Electricity Objective (NEO).
We made four submissions to this review.
The AER’s first submsission submitted on 18 April 2012 focuses on outlining the network planning and investment outcomes and the work the AER is undertaking in benchmarking.
On 30 November 2012 we provided a response to the review’s draft report. Our submission emphasised the PC’s considered contribution to the debate in some areas covered by the review’s terms of reference (namely, benchmarking and interconnectors). But, for other areas (particularly governance issues and the operation of the regulatory regime), the submission highlighted flaws in the PC’s analysis.
On 22 February 2013 we provided a further submission in response to the PC’s request for more information on our resourcing and for our views on the use of price caps versus revenue caps. Then, on 22 March 2013 we responded to a request for more information on potential interim solutions to disorderly bidding.
Solutions to congestion issues
On 22 March 2013, we provided a submission to the PC’s review regarding solutions to congestion issues. The AER considers that the solutions that are likely to have the most merit in the short term would be a combination of, firstly, National Electricity Rule changes so that generators must bid in their technical ramp rate, and secondly, a review by the Australian Energy Market Operator (AEMO) of the minimum coefficients for interconnectors in transmission constraint equations. The AER also considers that a simplified congestion management mechanism should be considered as a priority.
More information on the Productivity Commission inquiry into Electricity network regulation.