The Long Term Interests of Consumers is best promoted through economic efficiency. An economically efficient outcome (in either an effectively competitive market or a regulated monopoly) is one in which consumers pay no more than they need to for the quality, reliability, safety and security of supply they want. This framing of the legislative intent was specifically referenced when amendments to the process for AER revenue determinations and Limited Merits Review were introduced in 2013.
“The changes to the National Electricity Law and National Gas Law that will be introduced with the passing of this Bill will be key in ensuring consumers do not pay more than necessary for the quality, safety, reliability and security of supply of electricity and natural gas under the national energy laws.”
In assessing the potential trade-off between price and the other criteria it is important to clearly delineate the outcomes for each of the criteria that will occur as a result of a specific policy proposal or business initiative. This paper has covered the overall approach to assessing the promotion of the Long Term Interests of Consumers. There are a number of specific questions that can and will be posed about the assessment of the LTIC. These will be provided in a Supplement to this paper.
The full report ‘Interpreting the long term interests of consumers‘ can be read here.