Submission to the AEMC Review of the form of the reliability standard and administered price cap

PIAC made a submission to the Australian Energy Market Commission Reliability Panel’s directions paper on the Review of the form of the reliability standard and administered price cap.

The review has a number of stages to go before any action can be implemented.

We support the direction of the work, and particularly the ambition of the Panel to do more robust work on developing knowledge of consumers’ valuation of avoided outages, and their preferences in relation to risk.

We argue that the reliability regime must be founded first and foremost on the amount consumers’ are willing to pay for the marginal hour of outage, and this should imply the possibility of an increase in the number of hours of outage experienced if the cost of avoidance rises.