For energy reform to take place across Australia in a transparent and orderly way the key challenges of rising peak demand, industry investment, rising prices and market resilience must be addressed, according to the head of the Australian Energy Market Commission, John Pierce.

Speaking at a lunch with 25 key stakeholders and clients of Australian law firm, Maddocks, in Sydney today, Mr Pierce said the energy industry is going through a period where significant challenges must be met.

Mr Pierce outlined three strategic priorities that would need to be achieved over the coming years for energy reform and the challenges it faces to be effective.

These include:

•creating a predictable regulatory and market environment for rewarding economically efficient investment;

•building the capability and capturing the value of flexible demand; and

•ensuring the regulation of transmission and distribution networks promotes timely investment and efficient outcomes.

Patrick Ibbotson, a partner with Maddocks infrastructure team, said the policy agenda set out in the AEMC paper, Strategic Priorities for Energy Market Development, will impact on all Australians.

“The issues in this paper impact the price we pay for power to keep our lights on, our industries running and our nation prosperous”, Mr Ibbotson said.

"Key issues are certainty for investors and efficient operation of the energy market. One concern noted is the potential for vertical integration of generators and retailers to limit the degree of competition. Market rules are one thing but to make a project bankable a power purchase agreement is essential."

“While the report grapples with the difficult issue of demand management through better pricing signals, this may be a politically difficult path to take.”

The Australian Energy Market Commission’s ‘Strategic Priorities for Energy Market Development’ is available at:

http://www.aemc.gov.au/Market-Reviews/Completed/AEMC-Strategic-Priorities-Discussion-Paper.html