The Australian Energy Regulator (AER) has published draft versions of its new demand management incentive scheme and innovation allowance mechanism. The scheme and allowance mechanism will complement our ongoing reforms targeting consumer choice and more efficient network pricing outcomes. These include our work on tariff reform, metering contestability, ring-fencing and a rule change to strengthen the transparency and efficiency of replacement expenditure.
The scheme’s objective is to provide electricity distribution businesses with an incentive to undertake efficient expenditure on non-network options relating to demand management. The separate allowance mechanism’s objective is to provide distribution businesses with funding for research and development in demand management projects that have the potential to reduce long term network costs.
The AER draft scheme and allowance mechanism is the product of extensive collaboration with stakeholders. At the start of 2017, the AER received submissions on a consultation paper to inform the development of a robust, best practice scheme and allowance mechanism. This was followed up with a demand management Options Day workshop on 6 April 2017 and a Directions Forum videoconference on 29 June 2017.
After we receive submissions on our draft scheme and allowance mechanism, we will hold a stakeholder forum in to discuss these views. This will help us finalise a robust scheme and allowance mechanism in December 2017.
On 28 August 2017, the AER published the draft scheme, allowance mechanism and accompanying explanatory statements. The AER also published this consultation paper, to seek stakeholder views on a proposed rule change that will allow us to apply the scheme to distribution businesses earlier.
The AER invites written submissions on these publications by the close of business Thursday 12 October 2017.