“A competitive market is not determined merely by the numbers of players selling the same product the same way with little price or service differentiation. For consumers to have a role in making, breaking and shaping a market, they need choice – competing products, tailored service propositions – reflecting their myriad needs – no longer one size fits all.”1 Sandys, L., Hardy, J., Green, R. & Rhodes, A. (2018). ReDesigning Regulation: powering from the future, Grantham Institute, Imperial College London.
Energy Consumers Australia appreciates the opportunity to comment on the Australian Energy Market Commission’s (AEMC) Wholesale demand response mechanisms: consultation paperAustralian Energy Market Commission’s (AEMC) Wholesale demand response mechanisms: consultation paper, which is seeking views on three rule change requests submitted by:
1. Public Interest Advocacy Centre (PIAC), Total Environment Centre (TEC) and the Australia Institute (AI), seeking to introduce a mechanism for wholesale demand response
2. Australian Energy Council, seeking to introduce a register for wholesale demand response.
3. South Australian Government, seeking to introduce a mechanism for wholesale demand response; as well as a separate, transitory market for wholesale demand response.
Energy Consumers Australia broadly supports the objectives of changing the rules to introduce Wholesale Demand Response (WDR) which we see as contributing to an energy system and market where:
- Affordability is a constraint on investment and decisions about energy – an explicit criterion in decision making up and down the supply chain.
- Energy services are built around individuals to reflect their own unique circumstances, enabling people to easily manage their own use and costs – whether that is consumers who are innovating and engaged; or the majority of consumers who are focused on affordability and costs; or consumers with vulnerabilities.
- Investment in the power system – networks, generation, retail and consumer – is optimised and based on consumers demands that not a dollar more is spent than is necessary and not one day earlier than needed.
The traditional energy supply chain model and the overarching regulatory framework is changing in response to consumer expectations and technological advancements. It is more important than ever to ensure that the regulatory framework is fit-for-purpose over time by being adaptable.
A demand response mechanism can build a more competitive wholesale market by introducing new players offering new services. This should lead to more affordable electricity prices and greater optimisation of consumers’ investment in both the distribution networks and their own distributed energy resources. Further whether consumers participate is their choice, the service is individualised as it allows consumers to engage on their terms.
The full submission can be read here.