Consumer choices driving market change

The AEMC has implemented the Power of Choice reforms initiated by the COAG Energy Council to increase options for families and businesses to minimise future energy price rises

Power of Choice is all about opportunities for consumers to make informed choices about how they use energy; and incentives for efficient investment so community demand for energy services can be met by the lowest cost combination of demand and supply options.

Effectively managing energy demand contributes to reducing the cost of supply. A shift in use away from peak periods or a general reduction in consumption can delay investment in generation and networks (poles and wires), reducing overall cost and ultimately lowering prices for everyone.

Key Power of Choice reforms

The Power of Choice Review found that efficient markets are characterised by effective participation of both the supply and demand sides. It identified issues that prevented maximum consumer participation in energy markets.  What was missing, according to the review, were:

  • clear price signals and incentives: Consumers need clear signals about the cost of their energy consumption to manage their demand; and supply chain businesses need appropriate incentives to implement and facilitate demand side participation options.
  • informed choices: Consumers need a range of information so they can identify and implement efficient demand options.
  • tools: Technologies and skills are needed to support pricing, information, and demand management options, and to enable consumers to effectively respond to market signals.

To address these gaps, our Power of Choice reforms include:

  • removing networks’ effective metering monopoly to enable a ‘market led’ rollout of smart meters and services
  • introducing cost reflective network pricing
  • improving customer access to information about their energy consumption
  • recommendations to make it easier for consumers to switch retailers
  • allowing the market operator access to better demand side participation information.

Find out more about the Power of Choice Review.