COAG Decision Regulation Impact Statement – Australian Energy Market Commission
On 5 December 2019, the Australian Energy Market Commission (AEMC) released a final rule determination in which it decided to apply a demand management innovation allowance mechanism (DMIA) to electricity transmission network service providers (TNSPs).
Research and development (R&D) in energy transmission can deliver overall benefits to consumers in the long term, but imposes high up-front costs to TNSPs in the short term. The electricity transmission regulatory framework currently ‘resets’ prices every ~five years, which also impacts TNSP appetite for R&D. The DMIA is expected to address this by encouraging TNSPs to expand and share their knowledge and understanding of innovative demand management projects with potential to reduce long term network costs, and which could potentially lead to lower electricity prices for consumers.
The AEMC’s decision provides the Australian Electricity Regulator (AER) with discretion over how and when to apply the DMIA, including the level of the innovation allowance, which is further expected to improve the flexibility and responsiveness of the regime to changing technologies and future market developments.
The final rule determination has been assessed by the Office of Best Practice Regulation as compliant with requirements for a Council of Australian Government’s Decision RIS.
Please note: any accessibility queries should be directed to the Australian Energy Market Commission.