Shining Some Light on Energy Regulation

01 Jun 2017 2:41 PM | Anonymous member (Administrator)


PICTURE: Chair, Paula Conboy - Australian Energy Regulator


The last 18 months have been among the most challenging for the energy sector since the National Electricity Market was established nearly 20 years ago, according to the head of the Australian Energy Regulator (AER).

AER Chair Paula Conboy was addressing CACC members at a recent function hosted by RBC Capital Markets in Sydney where she shone some light on the often complex industry and explained how the AER was now adjusting the sector’s regulatory framework to ensure it is “fit for the future.”

She talked about the role of the AER and how it regulates the market and reports to government, industry and consumers on the status of the energy sector.

The AER monitors the wholesale electricity and gas markets to ensure energy companies comply with the legislation and rules, taking enforcement action where needed, regulates retail energy markets around the country (with the exception of Victoria), and provides retail price comparisons for consumers through its Energy Made Easy website to help them find the best energy solutions for their needs.

Ms. Conboy is known for her determination to help consumers get a better deal when it comes to their household energy bills.

“Our work is guided by our energy objectives which are to promote economic efficiency in the long-term interests of consumers. The energy objectives include a number of variables – price, quality, safety, reliability and security of supply – we focus on these variables and these alone,” she said.


PICTURE: Dominic Hudson (RBC Capital Markets), Paula Conboy (AER), Brian Hansen (CACC)


She said competition and consumer choice lead to better outcomes for everyone rather than overly prescriptive regulation and an incentive approach to the market yields more efficient outcomes. “Competition where possible, regulation where necessary,” she told the audience.

Rapid evolution in the industry like new business models for selling energy, a tightening of supply and soaring energy bills were a concern, prompting the organisation to look at where the lines should be drawn and how the AER can best ensure the monopoly components are regulated effectively.

Ms. Conboy touched on ring-fencing, tariff reform and improving tools to assess efficient forecasts in setting revenues.

She reviewed the various guidelines the AER had established in the last two years with the audience, including a consumer engagement guideline for network service providers to implement consumer engagement strategies that are effective for all stakeholders.

The AER will be consulting widely with the sector on areas where the regulatory framework may need to evolve, examining which services they will regulate and the broad nature of its current regulatory arrangements. [note that the CCP is already established and forms part of our revenue determination processes. We hold public forums, release issues papers and call for submissions to most of our reviews – be they guidelines or revenue resets]

Ms Conboy said the regulatory framework was resilient and would be able to accommodate changes and emerging issues.


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