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Submission to AEMO on minor amendments to the 2021 Inputs, Assumptions and Scenarios, and the ISP Methodology

We welcome the opportunity to comment on the Australian Energy Market Operator (AEMO)’s Consultation Paper on Competition Benefits Inputs, Assumptions and Methodology for their Integrated Systems Plan (ISP). Like AEMO, we believe that leveraging expertise from across the industry is pivotal in developing a robust ISP that supports the long-term interests of energy consumers.

We do not believe however, that the process for including competition benefits has been sufficiently exhaustive given the nature of the change to the ISP methodology. On this basis, we recommend AEMO leave competition benefits out of the 2022 ISP while encouraging that competition benefits in line with other methodological considerations are included during consultation for the 2024 ISP.

On content, we find the methodology for calculating so-called “demand response” benefits sorely lacking an evidence base; as a result, we recommend that this class of competition benefits be completely excluded.

Finally, we note that consumers’ own investments in rooftop solar have likely had significant impact in reducing market power from incumbent parties. The proposed methodology’s lack of consideration of the ways in which consumer investments in rooftop solar and other Distributed Energy Resources (DER) impact competition and market power is unclear at best and a fatal flaw at worst. The lack of clarity on how competition benefits interact with DER and the electrification already assumed in scenarios underline the need for a more exhaustive consultative and evidence-finding process prior to introducing competition benefits into the ISP’s methodology.

We go into further detail on these issues in our submission here.

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