Don't rush to rewrite electricity reliability rules
Energy users and suppliers are united in urging caution on a proposed fast track review of the current electricity reliability standard, to be considered by Ministers at COAG Energy Council this week.
Reliability is important but we must recognise that it comes at a cost to electricity users that increases exponentially as we strive for an unobtainable goal of 100% reliability. The current reliability standard balances system reliability and consumer costs by targeting no more than 0.002% unserved energy demand.
Maintaining that balance and applying it consistently across the National Electricity Market is essential to protect households and business against massive cost increases. The ACCC have already identified that consumers in NSW and Queensland are still paying the price of the tighter network reliability standards imposed by those states in 2005.
The reliability standard is already regularly reviewed by an independent and broadly representative panel. Last year the Reliability Panel endorsed the current standard to apply from 2020 to 2024. In 2021 they will review the standard again.
This well-considered process should not be sidelined by a separate fast-tracked review that rushes into rigid and costly new standards.
We are in grave danger of over-reacting to short term reliability concerns, rather than making more considered reforms and ensuring investments are in the long-term interests of consumers. Intense drought, increasing extreme weather and breakdowns at major assets are challenging our electricity system. Importantly, energy suppliers, energy users, the market operator and governments have already taken action to reduce the risks we face in the coming summer.
Further hasty steps will have negligible impact on system reliability over the upcoming summer - but they can undermine our efforts to manage the continuing transition in our electricity system.
Efficient investment to meet Australians' needs depends on market rules and government policies that integrate reliability, affordability and emissions. Delivering that should be the focus for Ministers this week. A calm and clear-eyed approach will serve us all best, whatever this summer throws at us.
Australian Council of Social Service
Australian Energy Council
Brotherhood of St Laurence
Business Council of Australia
Energy Users’ Association of Australia
St Vincent de Paul Society
For further comment contact individual organisations
About the Australian Energy Council
The Council represents 22 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.
Carl Kitchen, 0401 691 342