A journey of a thousand miles starts with a single rule change

This submission responded to the Australian Energy Market Commission’s (AEMC) draft rule determination, National Electricity Amendment (Distribution Network Pricing Arrangements) Rule 2014 (the Draft Determination). The Determination responds to a rule change proposal submitted by the NSW Independent Pricing and Regulatory Tribunal (IPART) and the COAG Energy Council regarding the tariffs charged by electricity network businesses. In the submission, PIAC welcomed the efforts to make electricity network tariffs more cost reflective, reducing cross-subsidies that often disadvantage low-income and vulnerable consumers. PIAC also raised concerns about the proposal to allow networks to use their own methodology to calculate long-run marginal cost (LRMC), which will be a key component of future tariffs. PIAC recommended that networks be required to use a methodology outlined by the Australian Energy Regulator (AER). PIAC also recommended that networks be required to consult with consumers about whether their proposed tariffs are fair, just and reasonable. In addition, the submission recommended that a review of energy concessions be undertaken to accompany the implementation of more cost-reflective network tariffs. Finally, PIAC noted that two significant hurdles exist to implementing more cost-reflective network tariffs: the need for smart meters and the impact of retailers in changing tariff shapes.