How can regulators listen, adapt and continue to act in energy consumers best interests?
Ubiquitous, low-cost energy is considered a basic right in Australia. Delivering this to consumers requires a complex mix of technologies, rules, markets and regulators. Historically, energy consumers have left the role of understanding and advocating for their interests to regulators and government. Consumers have played a mostly passive role in key regulatory processes but what energy consumers need from the energy system is changing.
The challenge of hearing consumer voices is not unique to energy. In most complex, regulated markets, consumer voices risk being muted because the cost of engaging individual consumers in complex regulatory processes is prohibitively high. In some cases mechanisms for participation either don’t exist or are not promoted.
These challenges need to be overcome. Regulated markets function better when regulators understand consumer preferences. In energy markets, technology changes such as distributed renewable energy generation, micro grids, stand-alone power systems and demand-side management are empowering consumers in ways not foreseen when the current rules were established. Regulatory processes are running to keep up with these innovations but risk being outpaced by consumer take-up. How do regulators listen to consumers and adapt to ensure they are truly acting in the best interests of consumers?
The Australian Energy Regulator (AER) regulates the electricity network and covered gas pipeline, determining how much consumers can be charged for using these networks and enforcing rules relating to these networks. To keep up with changes to the energy market, the AER is guiding the implementation of the rules, undertaking regulatory determinations and adapting to the new energy landscape. It has established the Consumer Challenge Panel (CCP) to provide a voice to consumers in this process.
To support the AER’s objectives, KPMG has conducted an independent review of the CCP to help it better support customers, the regulator and networks. It was recommended and accepted that consumers need a bigger voice in expenditure and pricing determinations. It was also agreed that there is scope for the CCP to focus on higher value work, in particular to ensure that regulatory determinations reflect consumer preferences.
Further information on the review can be found here.