Draft amendment – Retailer Reliability Obligation trigger

PIAC responded to COAG Energy Council’s draft amendment on the Retailer Reliability Obligation (RRO) trigger.

We highlight any reliability standard must reflect consumer preferences, especially for out-of-market mechanisms such as the RRO that may disrupt the normal operation of planning, market signals and risk allocation.

PIAC does not see any need for, or merit in, moving away from the current reliability standard of 0.002% Unserved Energy (USE). 0.002% USE represents a level of reliability that is consistent with consumer preferences.

We consider the costs of the energy system should be recovered from beneficiaries, and consumers are not the beneficiary of reliability levels that exceed their willingness to pay. If a government (or other body) seeks to increase the level of reliability beyond a level determined by consumer preferences, the incremental cost should be recovered from budget revenue, not consumer energy bills.