The Australian Energy Market Commission (AEMC) today published terms of reference for a review to develop new approaches for the regulation of electricity distribution and transmission reliability across the National Electricity Market (NEM).

The joint Review of National Frameworks for Transmission and Distribution Reliability follows the package of reforms announced by the Council of Australian Governments (COAG) on 7 December 2012.

The AEMC received a review request from COAG’s Standing Council on Energy and Resources (SCER) on 8 February 2013. It notes that costs associated with investment in network infrastructure are passed on to consumers through electricity bills; and underlines the importance of having networks provide reliability levels consistent with the price that consumers are willing to pay.

SCER acknowledged that it is appropriate for reliability levels to vary within jurisdictions, but recognised that the way that reliability levels are set currently differs across the market.

The state, territory and federal energy ministers have asked the AEMC to develop nationally consistent frameworks for expressing and setting standards; and reporting on transmission and distribution reliability outcomes. SCER requests that the frameworks incorporate values of customer reliability, assessment of price/reliability trade-offs and be able to account for local conditions.

This review will be conducted as separate transmission and distribution workstreams and will build on previous work undertaken by the AEMC, specifically:

• the SCER response to the AEMC’s National Transmission Reliability Standard Framework, published by the MCE in November 2011;
• the Review of Distribution Reliability Outcomes and Standards, New South Wales workstream, finalised by the AEMC on 31 August 2012; and
• the national workstream for the Review of Distribution Reliability Outcomes and Standards draft report, published by the AEMC on 28 November 2012.

Reports previously published by the AEMC note that national frameworks for network reliability would provide a transparent approach for NEM jurisdictions to set efficient reliability levels which take account of the cost required to deliver reliable electricity supplies and the value placed on reliability by customers.

Consistency would also help the Australian Energy Regulator benchmark reliability performance and determine efficient levels of expenditure to achieve reliability outcomes across different network businesses.

The transmission workstream will build on the key aspects of the national framework agreed to by SCER and will commence with the publication of an issues paper in March 2013 for public consultation.

The distribution workstream will further progress the draft recommendations of the national workstream of the Review of distribution reliability outcomes and standards, which was undertaken by the AEMC through 2012. The advice will take into consideration the views expressed by stakeholders in submissions on the draft report in the development of a national framework.

An interim report will be published as part of the distribution workstream in May 2013 for public consultation.

Next steps

Transmission workstream (EPR0028)

 Distribution workstream (EPR0033) 

14 February 2013

For information contact:

AEMC Senior Director, Chris Spangaro 02 8296 7800

Media: Communication Manager, Prudence Anderson 0404 821 935 or 02 8296 7817