Australia's energy markets operate under a set of rules and regulations that have a clear objective - to meet the long-term interests of consumers.
Consumer choices and protections have been enhanced over the past 25 years through a series of major reforms. National laws have been introduced in most states and territories to ensure that most markets are regulated by a set of nationally consistent laws. Where these laws are not in place governments are working to ensure the rules governing electricity and gas markets and consumer protections are as consistent as possible.
The Council's Power of Choice initiatives will give consumers greater options in the way they source and use electricity through reforms which support the rollout of advanced meters and the development of innovative tariffs and energy services. This will help to empower consumers to make informed choices about their energy supply and use and decide which best meets their needs.
Consumer protections and advocacy
Australian consumers rely on access to a reliable supply of energy. Ensuring that consumers have fair and honest dealings with energy businesses provides them with the confidence to make good choices with their use and supply of energy.
Reducing regulatory complexity and lowering barriers for energy service providers to enter the market means more competition and more opportunities for consumers to control their energy use and bills.
Along with increasing competition have come stronger consumer protections through the National Energy Customer Framework (NECF).
Consumers also have a voice in energy market matters through the creation of Energy Consumers Australia, a national advocacy body that aims to inform regulatory and policy decisions impacting on consumers.
Energy Market Transformation
The energy sector is undergoing a major transition, driven by changing technologies, new business models, increasing consumer engagement and climate change policy.
Competitive energy markets with low barriers to entry provide strong incentives for innovation and the adoption of new technologies that benefit consumers. These technologies will empower consumers to engage more actively with their energy decisions, by providing a wider range of energy supply and use options, as well providing new options around the future development of the energy system.
The adoption of new technologies, such as distributed generation, electric vehicles, storage, and energy management systems will challenge traditional business models for the established energy markets. It is critical that the laws and rules governing energy markets evolve in such a way that they support and appropriately accommodate technological change. The Energy Council has already pursued significant work in this area but recognises further assessment is required to ensure the regulatory frameworks are flexible enough to meet these challenges.
At its December 2015 meeting, the Energy Council endorsed a work program to be progressed by the Energy Market Transformation Project Team, to address four key areas. This work is complementary to the work being done by the Energy Council to better integrate energy and climate policies.
Enhanced Competition and Innovation - This work stream is looking at barriers which may prevent:
competition developing in markets for services delivered by emerging technologies such as battery storage, or
investment by regulated network providers in innovative technologies to improve the efficiency of the regulated service.
Empowering Consumers - This work stream will review what consumer protections should apply to customers with respect to new products and supply options emerging in the electricity market.
Ongoing Power System Security - This work stream will consider work the Australian Energy Market Operator (AEMO) is doing on whether current arrangements for managing power system security are adequate to integrate large volumes of intermittent generation.
Efficient Investment and Operation of Electricity Infrastructure - This work stream assesses the flexibility of existing network regulatory arrangements, particularly the economic framework, as we shift from a centralised system to a more decentralised one.
The Energy Council’s Energy Market Transformation Project Team has prepared a work program.
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At its August 2016 meeting, the Energy Council agreed to release three consultation papers seeking feedback on issues relating to stand-alone systems, consumer protections and registration systems for battery storage.
For more information on these consultation papers click here.
Australian Gas Markets
Australia's gas markets are changing rapidly.
The east coast gas markets are now interconnected and natural gas flows are more dynamic so gas can move across the network to where it is needed. The markets are also adjusting to emerging exposure to international gas prices as the export of gas from the east coast occurs for the first time.
Balancing supply and demand is critical to ensuring that Australian consumers and industry can access affordable gas when and where they need it.
The Council's Australian Gas Market Vision underlies a number of initiatives to address supply and competition concerns, and to make it easier to buy and sell gas in Australia.
Increasing gas demand is putting pressure on both gas supply and prices, and impacts certainty for business and consumers in domestic markets.
Energy Council Ministers are working together to bring scientific and regulatory expertise to support the responsible development of unconventional gas supplies.
Gas Market Development
The Energy Council is committed to a comprehensive Gas Market Reform Package in August 2016, to drive the achievement of its Australian Gas Market Vision for a liquid wholesale gas market where an efficient reference price provides signals for investment and new gas supply.
The reform package comprises four priority areas and 15 reform measures. The four priority areas are gas supply, market operation, gas transportation and market transparency.
The Energy Council has also committed to make implementing this package a major priority and has agreed to create a dedicated Gas Market Reform Group to lead the implementation effort.
Energy & Carbon Policy
Electricity generation contributes around one third of Australia's total emissions, so has a critical role in meeting emissions reductions targets.
Energy and Carbon
Successful integration of climate and energy policy will be crucial to meeting Australia's climate change goals at least cost to the community.
The Energy Council is developing new platforms to ensure policies on energy and climate change are assessed to maximise their benefit and avoid any unintended effects for prices and the energy market.
The National Energy Productivity Plan (NEPP) is designed to increase the value we get from our investment in energy. It's an effective way to lower emissions and reduce costs, while improving our competitiveness and growing the economy and jobs.
Improving Institutional Performance
Australia's energy markets are facing significant disruptions and the structures governing them must be flexible enough to adapt to new challenges. Delivering the best outcomes for energy consumers requires clearly specified and stable policies, appropriate regulations, the delegation of some roles to specialist institutions, suitably qualified and experienced institutional managers, and institutional separation.
Review of Governance Arrangements
The final report of the Review of Governance Arrangements for Australian Energy Markets, which was commissioned by the Energy Council, was released in October 2015. The report concluded that the current arrangements are fundamentally sound but also identified opportunities to improve the transparency, timeliness, resources, and clarity of function and purpose of energy market governance arrangements that will increase confidence in energy market policy and decision making.
The COAG Energy Council welcomed the final report and released its response in December 2015. The Council’s Senior Committee of Officials has agreed an implementation plan to deliver the Council’s response to the Governance Review.
The Governance Review Implementation Plan (GRIP) breaks up the agreed responses into eight projects, with differing priority levels. The three key projects currently underway are the reforming of Council operations, improving AEMC processes, and the proposed separation of the AER from the Australian Competition and Consumer Commission (ACCC). All of these initiatives are aimed at improving institutional performance.
The COAG Energy Council’s response and the GRIP can be found here.
Statements of Expectations for the AEMC and AER
In 2013, the Council agreed to an accountability and performance framework for the AEMC and the AER, consisting of:
Statement of Expectations developed by the Council
Statement of Intent to be developed by the AEMC and AER respectively.
For more on this project, click here.
Security, Sustainability and Stability of the National Energy Market
On 7 October 2016, The COAG Energy Council agreed to an independent review to ensure Australia’s energy security as we transition to a lower emissions future. The independent review will draw together and build on the analysis and findings of the recent and ongoing work streams of the Energy Council.An expert panel with extensive experience in business, energy markets, science and engineering have conducted the review on the security of the National Electricity Market and will assist Dr Alan Finkel, Australia’s Chief Scientist who is chairing the review.On 9 December 2016, Dr Finkel delivered his preliminary report to the meeting of Council of Australian Governments (COAG).The panel will conduct stakeholder consultations and deliver a blueprint to maintain energy security and reliability in the National Electricity Market, next year.For more information on the Independent Review, please click here.
Energy Market Governance