The Chairman of the Australian Energy Market Commission (AEMC), Dr John Tamblyn, today announced the publication of draft findings on its Review of whether national energy market frameworks require amendment to accommodate the introduction of the Carbon Pollution Reduction Scheme (CPRS) and expanded Renewable Energy Target (RET).  This is the final stage of a consultation process, which began in August last year, before the AEMC provides its final advice to energy ministers in September 2009.

 "The introduction of the CPRS and expanded RET is expected to drive a substantial transformation of Australia's energy markets which will inevitably result in increased energy costs," Dr Tamblyn said.

"Creating robust frameworks within which energy markets can manage this transition are therefore key to minimising transition costs and risks, and protecting the interests of customers.

 "The 2^nd Interim Report has confirmed that the existing competitive energy markets, supported by efficient economic regulation of the monopoly network sector, continue to provide the most effective framework for responding to major changes in economic and policy circumstances.

"We have identified the need for change in some specific areas to ensure that market frameworks in the National Electricity Market are up to the challenge.  First, increased flexibility in how regulated retail tariffs are set.  Second, reform to how investment to connect generation in remote areas is planned, priced and funded.  Third, more cost-reflective charges for generators in respect of their use of the transmission network.

 "In the Western Australia market we have highlighted the potential to improve the efficiency with which generation is dispatched, and capacity on the transmission network is made available to the market." Dr Tamblyn added.

In setting the wider context for the Review he noted that energy markets are facing a number of shorter-term risks, in part reflecting past policy uncertainty and time lags for new investment.

"It is important to recognise that while robust energy market frameworks that promote competition, efficiency and reliability can assist in managing risks during the transition to a low carbon economy, they cannot eliminate them entirely" Dr Tamblyn said.

The scope of this Review includes the National Electricity Market (NEM) States [Queensland, New South Wales, Victoria, Tasmania, South Australia and the Australian Capital Territory] as well as Western Australia, and the Northern Territory. There is significant variation in the market arrangements in these different geographical areas and the review's analysis reflects this.

Submissions are due 3 August 2009.

For further information contact:
AEMC Chairman, Dr John Tamblyn 02 8296 7800