Rule Change: Completed
On 20 August 2015, the AEMC made a final rule to help balance the incentives on distribution businesses to make efficient decisions in relation to network expenditure, including investment in demand management.
The rule amends the existing Demand Management and Embedded Generation Connection Incentive Scheme (DMEGCIS) arrangements in Chapter 6 of the NER to provide greater clarity to the AER and stakeholders in respect of how a demand management incentive scheme should be designed and applied. This includes the introduction of clearer objectives and principles to guide the Australian Energy Regulator in developing and applying an effective incentive scheme and innovation allowance.
The key features of the rule, which also are consistent with the changes proposed by the TEC and the COAG Energy Council, are:
- Creation of separate provisions in the NER for a demand management incentive scheme and a demand management innovation allowance mechanism (innovation allowance).
- Introduction of an objective for the incentive scheme, and a separate objective for the innovation allowance, specifying what these must aim to achieve.
- Introduction of a set of principles for the incentive scheme, and a separate set of principles for the innovation allowance, to aid the AER in developing and applying these to help achieve their respective objectives.
- Requirement for the AER to develop and publish the incentive scheme and innovation allowance in accordance with the distribution consultation procedures, by 1 December 2016.
On 22 November 2013, the TEC submitted a rule change to the AEMC seeking to amend the rules governing the demand management incentive scheme set out under Chapter 6 of the National Electricity Rules.
On 17 December 2013, the AEMC received a further rule change request from the COAG Energy Council also seeking to amend the demand management incentive scheme rules.
Given that the requests raised issues in the NER on similar subject matter, on 19 February 2015, the AEMC gave notice under section 93(1)(a) of the NEL to consolidate the request from the TEC with that of the COAG Energy Council. The result of this consolidation was the creation of a new consolidated rule change request. The AEMC commenced consultation on the consolidated rule change request on 19 February 2015.