COAG backs major energy market reforms

THE Council of Australian Governments has agreed to two key electricity measures: developing an energy productivity framework and backing demand response measures that will engage users.

Richard Collins
COAG backs major energy market reforms

The communique from COAG’s Energy Council, which met last week, said it recognised the changes sweeping the sector and proposed a series of reforms.

The support for an energy productivity agenda is a big win for the Australian Alliance to Save Energy, which has been pushing the idea on the back of a similar initiative in the US that has won White House support.

The Energy Council said it “considers a concerted national focus on energy productivity can drive higher economic output, reduce energy bills for households and business, increase national competitiveness, reduce carbon emissions and improve sustainability”

The new policy framework will coordinate nationally across both energy efficiency and energy market reform, seeking to improve market and regulatory efficiency.

“The framework will build on current energy efficiency initiatives and market reforms underway and consider if additional measures are needed to engage and empower consumers in choosing new services (such as trusted decision tools and access to data), measures to support or reduce barriers to competition and innovation in new services, and to improve minimum efficiency standards in buildings and appliances,” it said.

The nation’s energy ministers also reviewed the cost benefit analysis of a Demand Response Mechanism (DRM) prepared by consultants Oakley Greenwood.

“The council agreed that consumers would benefit from changes to the rules that allowed greater access to demand response services and tasked officials with preparing a rule change proposal for the consideration of the AEMC (Australian Energy Marketing Commission),” it said.

“The council also supported changes to existing rules to allow for the unbundling of ancillary services. The rule change request will propose a DRM scheme that is based on voluntary participation by market participants and a staged implementation to minimise costs for non-participants in the scheme.

Among other points in the communique were:

  • It does not support assistance to generators to exit the market, but will task the Australia Energy Market Operator (AEMO) with further investigations into appropriate pathways to ensure exit of generators does not jeopardise power system security;
  • It is currently ‘scenario testing’ the current regulatory provisions to ensure these are flexible and robust in light of emerging opportunities, new technologies, potentially changing customer expectations and declining demand – and will receive a report at its next meeting;
  • It supports consumers’ right to take up new technologies, but not on the basis of cross-subsidies from other end users, code for the squabble over the Renewable Energy Target; and
  • Released its vision for the gas market, which reflects an objective to lead to “the establishment of a liquid wholesale gas market that provides market signals for investment and supply, where responses to those signals are facilitated by a supportive investment and regulatory environment, where trade is focused at a point that best serves the needs of participants, where an efficient reference price is established, and producers, consumers and trading markets are connected to infrastructure that enables participants the opportunity to readily trade between locations and arbitrage trading opportunities”

As alluded to by the Australian Petroleum Production and Exploration Association last week, the COAG Energy Council’s 12 specific outcomes of its vision included improving competition and market function, but not by pursuing a national reservation policy or national “interest test”


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