John Pierce, Chairman, AEMC

Sydney, Australia --- (METERING.COM) --- December 5, 2012 - Australian consumers are set to get more options in the way they use electricity, following the publication last week of the Australian Energy Market Commission’s (AEMC) final “Power of Choice” review.

The review, which was requested by the Standing Council on Energy and Resources (SCER),sets out recommendations for improving demand side participation (DSP) in the national electricity market. While there is some evidence of uptake of DSP in the national market over recent years, its efficiency can be improved by more active participation by the demand side.

According to the review three key reforms can help achieve efficient demand supply balance in the market. These are:

• Reward DSP in the wholesale market, which would be achieved through the establishment of a new demand response mechanism
• Provide appropriate consumer protection arrangements and gradually phase in efficient and flexible pricing options, with the segmentation of consumers into three consumption bands proposed
• Introduce competition in metering services and develop a framework for smart meters and their services.

Under the proposed model, the onus would be on the retailer or DSP service provider to elicit consumer consent to a smart meter through offering appropriate retail pricing offers and value added services – an approach that is seen as promoting innovation, greater DSP options for consumers and efficiency in metering costs, states the review.

Effective communication and education strategies will also be needed to build consumer confidence so that consumers utilize the potential of DSP products and services offered by the market. This will require action by governments, retailers, networks, consumers and community organizations.

In addition to these reforms, the review also recommends a number of supporting changes to improve the ability of the market to maximize the potential of efficient DSP. These include enhancing consumers’ ability to access consumption information, establishing a transparent framework for third parties offering demand management services, and supporting retail competition through arrangements for retailer switching.

It is also recommended to introduce a new and replacement smart meter program, with the installation of smart meters to occur in defined situations such as refurbishment, new connections and replacement of old meters. The continued installation of accumulation meters today will lead to increased costs for the consumer and system costs in the long term, says the review.

Releasing the review, AEMC chairman John Pierce, said the package of reforms would enable the electricity market to meet the needs of consumers over the next 15-20 years.
“The reforms provide more opportunities for consumers to make informed choices based on the benefits that end use services provide. Ultimately, consumers are in the best position to decide what works for them.”

The review, which also includes a proposed implementation plan, will now be reviewed by the ministerial SCER.