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Michelle groves presentation: Women in energy forum, Aug2013

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Michelle Groves, CEO, AER presentation to the inaugural Women in Electricity Forum, at Deloitte Melbourne, 8 August 2013

Michelle Groves, CEO, AER presentation to the inaugural Women in Electricity Forum, at Deloitte Melbourne, 8 August 2013

Published in: Business, Technology
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  • 1. Women in Energy Networking Michelle Groves CEO, Australian Energy Regulator
  • 2. The AER’s role Wholesale gas & electricity markets Transmission networks & pipelines Distribution Networks for gas/electricity Retail We monitor wholesale markets and enforce rules We regulate revenues of transmission businesses We regulate revenues of distribution businesses We regulate non- price retail activities in some jurisdictions
  • 3. Recent price increases • Rising network costs main contributor to price increases • Drivers include the need to replace ageing equipment, meet peak demand and higher finance costs 80 100 120 140 160 180 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Index1991=100 Household electricity cost across the NEM
  • 4. New regulatory framework • New framework allows for a balanced assessment of the need for the ongoing investment required for continued reliable energy supply, with the need to minimise costs to consumers. • AER has initiated Better Regulation Program to implement these reforms
  • 5. Rate of return • The focus is on providing an overall rate of return that more accurately reflects actual financing practices • The new rules allow for a common rate of return framework in which a broader range of materials can be considered
  • 6. Expenditure assessment framework • More holistic assessment of required expenditure • Range of tools, including benchmarking, for assessment of efficient expenditure needs • Processes for standardisation and analysis under development
  • 7. Efficiency incentives • New rules provide stronger incentives for efficient investment – Capex sharing scheme i.e • Benefits of underspend shared with consumers • Costs of over-runs shared with consumers; • Discussion over whether same sharing ratios would apply – Potential for ex post reviews and exclusion of inefficient capex
  • 8. Consumer engagement • Requirement for network businesses to consult with consumers in the development of regulatory proposal • Range of engagement initiatives: – Consumer Reference Group – Consumer Challenge Panel – National Energy Consumer Advocacy Body
  • 9. Putting the consumer at the centre of the market • The vision must be for a market which operates to serve consumers. • This vision requires consumers to have: – Better information – consumption data – Better incentives – more efficient pricing – Better technology – to help understand consumption patterns. • ‘Power of Choice’ implementation critical
  • 10. Women in Energy Networking Michelle Groves CEO, Australian Energy Regulator

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