Nexa Advisory is pleased to share our submission to the Australian Energy Market Commission (AEMC) on electricity pricing for a consumer-driven future.
We broadly support the scope of the Review – which is long overdue – and the key focus areas outlined by the AEMC are appropriate:
- Market arrangements that provide for consumer choice between a range of appropriate products, services, and associated prices that suit their needs and preferences.
- The role of distribution networks in enabling the right products, services, and incentives for consumers, and the efficient cost and pricing outcomes that result.
- The role of retailers and energy service providers in effectively packaging and pricing electricity products and services to match consumer preferences.
Without addressing the governance and incentive structures that shape DNSP behaviour, the review may reinforce the status quo rather than unlock meaningful reform. As such, Nexa Advisory recommends that as part of this Review, the AEMC focus on practical actions to support competition and enable – rather than define – innovative consumer energy products and services. The AEMC should:
- Review and streamline the National Energy Customer Framework (NECF) to address retail competition barriers and provide an equal playing field for new entrants, including third-party aggregators and service providers.
- Reintroduce a structured, collaborative review process similar to the Electricity Network Economic Regulatory Framework (ENERF) Review – to provide an ongoing mechanism to evaluate whether the regulatory framework remains fit for purpose, and whether alternative network economic frameworks and models are needed to deliver efficient network development and consumer value. This includes whether tariff structures are delivering efficient outcomes, whether ring-fencing waivers are distorting competition and whether consumer protections are keeping pace with market innovation.
- Strengthen the existing ring-fencing provisions – and better reflect the risks to competition posed by continued erosion of ring-fencing provisions – such as through ongoing waivers being granted by the AER for DNSPs. This should inform the case for upholding and reinforcing ring-fencing obligations to prevent regulated DNSPs from owning assets such as EV charging infrastructure (EVCI) and community batteries that can be competitively delivered and are directly relevant to the scope of the energy products and services being considered by this Review.
- Address other barriers to facilitate CER uptake – including by strengthening data transparency obligations for DNSPs, streamlining grid connections and reducing costs, and developing tariff structures that recognise smart infrastructure and value consumer contributions into grid services.
Read our submission here: Nexa Advisory submission – AEMC Pricing Review Discussion Paper