Canberra
The Council of Australian Governments (COAG) today agreed the most comprehensive package of reforms to Australia's electricity markets in more than a decade.
The reforms are designed to return the interests of consumers to the centre of Australia's electricity markets.
The Gillard Government has worked with state and territory governments through the Standing Council on Energy and Resources (SCER) and with business through the Business Advisory Forum (BAF) to agree on reforms that will limit future electricity price rises.
The Gillard Government called for solutions on the table at COAG and we're pleased that Premiers and Chief Ministers have agreed to this comprehensive package which will help Australian families with the cost of living and help keep Australian businesses competitive.
Agreement to this package is a starting point; it's now up to the states and territories to implement these actions so that consumers reap the benefits.
If state and territory governments make all the changes proposed in this package, consumers will have greater choice and greater control over their electricity costs.
Key features of today's agreement include:
Rule changes to ensure no over-investment in networks:
* Commitment in-principle to a new national framework of best-practice reliability standards which give added weight to the interests of consumers and in-principle agreement to transfer reliability setting to the Australian Energy Regulator;
* Early implementation of new rules that will ensure investment by network businesses is more efficient; and
* A public consultation process to improve the Limited Merits Review Regime to minimise the risk of ‘cherry-picking' by network businesses while also ensuring review arrangements provide an effective back-stop for business.
Giving consumers a voice in the electricity market:
* Establish a Consumer Challenge Panel, comprised of industry experts, to represent consumers' interests in regulatory determinations;
* Implement national consumer protections (including for smart meters) by 1 January 2014; and
* Develop a national consumer advocacy body, in close consultation with stakeholders, to provide a national consumer voice for energy policy and regulatory development.
A strengthened independent regulator:
* An additional $23 million in federal funding over four years for the Australian Energy Regulator to support additional expert resources, clearer and more transparent reporting, and greater consumer engagement. The strengthened Regulator will remain in its current structure as part of the ACCC.
More choice for consumers:
* A commitment by jurisdictions to report back to COAG next year on pathways towards more flexible electricity prices, where effective competition exists, to allow retailers to offer consumers a better deal; and
* A commitment to make it easier for retailers to offer innovative products to give consumers the choice to have such things as smart metering, in-home displays, and time-of-use-pricing so they may better manage their energy use and reduce costs.
Actions to reduce electricity peaks:
* Agreement to provide for greater demand-side participation to make it easier for consumers to reduce demand, particularly at peak periods, to minimise the need for new investment in energy infrastructure - drawing on the AEMC's Power of Choice review.
Business welcomed the direction of the reform package at the BAF yesterday and called for urgent and concrete action by all governments to help moderate the impact of high electricity prices on consumers and business.
Only through cooperation can effective energy market reform be achieved.
Minister Ferguson, as chair of SCER, will continue to work with Energy Ministers to ensure the Government can deliver real outcomes to consumers.
COAG will require Energy Ministers to report regularly on progress in 2013.
Further information on the reform package is available at www.coag.gov.au.