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Commentary

Testimony to the House of Representatives Standing Committee

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Energy Consumers Australia

Our Director of Advocacy and Communications, Chris Alexander, appeared before the House of Representatives Standing Committee on Environment and Energy Inquiry into Modernising Australia’s Electricity Grid. The major issues covered in Chris’ testimony included: The need for the energy market transition to occur with affordability as a constraint; the importance of efficient network pricing; a dynamic, consumer-driven future; the importance and challenges of smart meters; and, the benefits of increased transparency about what consumers are paying for on their electricity bills.

Below is a short excerpt of the comments from Chris Alexander:

When we think about modernising the grid we think about the grid as the whole system, because we need to start thinking less in terms of the traditional steps in the supply chain and more about how it all works together. In thinking about that, we think about what we should probably be doing right now and what we should be doing over time to move us towards a much more dynamic and sophisticated system. At the moment, our absolute priority is making sure all the decisions we’re making are done through a prism of affordability. The move last week to abolish limited merits review was a great first step. We hope that that will drive the industry and network businesses to stop thinking about extracting extra revenue from consumers through a legal process and sit down with consumers upfront, identify what their needs are and work to those.

The other big problem we need to try and solve is around network pricing. There’s been an approach with great intentions in probably the last five years to think, ‘If we can design the perfect dynamic network pricing regime, we’ll get consumers to change their behaviour and we’ll get innovation coming into the market.’ That hasn’t been done with a real sense of how consumers are going to react to those price signals and whether they can react. We need a huge effort on energy efficiency, empowerment and management to give consumers the information and tools they need to respond to pricing. For the hotelier that I was talking about in regional Victoria, a price signal is not much good if he doesn’t have an option to shift his load. There is work being done on that. We’re doing a lot of work under the low income energy efficiency scheme, trying to draw the remains from 21 pilots that were done and looking at how consumers can limit energy efficiency technology. There’s a huge amount there by way of insights. The trick will be taking those insights from relatively small pilots and trying to embed them in standard business practice and government energy efficiency policy.

If that’s the now, casting forward, we can all imagine a network that probably looks more like the internet than the current system, with it operating as a platform for services. If we’re going to build that much more dynamic future market where consumers can trade and do all the exciting things that they want to do, it’s going to have to be built on data. As it stands, it’s really difficult for consumers to get access to their data. Indeed, it’s difficult for innovators to get access to that data. There’s a lot of work that’s been done through the Productivity Commission and some other processes looking at how you put the data in the hands of the consumer and innovators. It’s early work. A really strong recommendation from this committee that that needs to be accelerated would be hugely helpful.

The full transcript of Energy Consumers Australia’s appearance can be found here.

The homepage for the inquiry can be found here.

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