Energy Consumers Australia appreciates the opportunity to provide this submission to the ESB. Our submission primarily focuses on aspects of the NEG in respect of which the ESB has specifically sought feedback and which are likely to impact the long-term interests of consumers. Energy Consumers Australia has no detailed comments on the emissions reduction requirement. Accordingly, our submission focuses principally on the reliability requirement.
In our view, the importance of acting to rebuild the confidence of consumers in the sector, and trust in the energy system, cannot be overstated. Consumers understand that there is a generation “supply” problem, with the ageing of the coal fired power station fleet, and the need for a minimum amount of dispatchable energy to be available to meet consumer and system needs, in the transition to a lower emissions economy.
In this context the focus of the NEG must be about delivering the transition that focusses on lowest efficient costs and lower bills.
In our view there are two high level aspects of the NEG that go directly to affordability and outcomes for consumers.
Through the reliability mechanism, the NEG could incentivise and facilitate adequate investment in dispatchable energy, including demand response.
However, there must be no opportunity for over-investing in generation assets at the same time as past investment in network assets has resulted in lower capacity utilisation, and spiralling costs for consumers.
In other words, there must be no opportunity for any single part of the system to de-risk its own position at the expense of consumers through added costs.
At the same time, using technology and data, consumers are more willing to be partners in achieving an energy system that contributes to affordability in their communities through incentives or rewards for consumers.
There are many more opportunities for sophisticated demand response measures and programs, than we have seen adopted so far. More can be done to build on the AEMO-ARENA trials over summer and programs such as Power Changers and Summer Saver in Victoria, and Peak Smart in Queensland.
In responding to the Draft Detailed Design Consultation Paper, Energy Consumers Australia supports:
- the approach to delivering adequate reliability, in providing clear investment signals, while lowering emissions;
- the design elements that work to improve liquidity, transparency and the effectiveness of competition in retail markets, though we request that further clarity on some of these elements be provided in the subsequent development of the changes to the National Electricity Rules;
- the technology neutrality of the design of the NEG, so that the least emissions intensive, lowest costs and most reliable generation – including demand response – is available in the right place and at the right time.
In this submission, Energy Consumers Australia has provided feedback on the proposed design of the NEG. However, we note that there are a number of complementary reforms that will need to be integrated with the design of the NEG should the COAG Energy Council agree to proceed with its implementation on 10th August 2018. We look forward to the opportunity to engage in the process for developing the NEG legislative and regulatory reform package.
The full submission can be read here.