In a report released today, the AEMC has outlined its reform priorities in network economic regulation and how this fits with longer term market reforms led by the Energy Security Board’s Post 2025 Market Design for the national electricity market.
Australia's electricity markets are undergoing a profound transformation. This reflects the transition from a centralised system dominated by thermal generation to one with increasingly diverse generation, including both grid scale and distributed renewable generation resources supported by energy storage and network solutions. The way consumers interact with the electricity system is also changing in response to new technology and market developments and climate change concerns.
The final report of the 2020 Electricity network economic regulatory framework review addresses the need to continually adapt the regulatory framework as the power system transforms and the role of distribution networks evolves.
During consultation for this review, stakeholders highlighted major developments and issues for consideration. This report explores the implications of those issues and outlines how the AEMC will, over the next 18 months, conduct a holistic review of the regulatory framework for distribution networks. The result will be to clarify the role of distribution businesses and ensure the appropriate regulatory arrangements are in place to support network transformation.
The report also highlights the significant transmission investment that has been proposed over the next few years. Actionable projects under the 2020 Integrated System Plan (ISP) are expected to cost more than $11 billion from 2022 to 2026. A timely question is whether the existing economic regulatory framework remains fit-for-purpose when these large, discrete, non-recurrent transmission investments are required, such as the large transmission projects identified in the ISP. We will work closely with the Australian Energy Regulator (AER) to understand whether any changes are required to the economic regulatory framework for transmission networks.
Key immediate priorities identified in the report are:
- 2020: Activities that promote integrating distributed energy resources into the grid
- 2021: Focus on the role and economic regulation of distribution network service providers in light of integrating distributed energy resources; consider whether implementing the ISP will require changes to the transmission investment framework
The purpose of AEMC’s annual Electricity network economic regulatory framework review is to consider whether the economic regulatory framework for electricity networks continues to support the delivery of the national electricity objective in light of these changes in the energy market. In making this assessment, the AEMC undertook significant consultation with stakeholders to understand different perspectives and identify opportunities for reform. This consultation has informed the Commission's understanding of how key reforms are progressing and what priority reforms should be.
Media: Kellie Bisset, Media & Content Manager, 0438 490 041 or (02) 8296 7813