National Electricity Market final inquiry report

Many Australians have been feeling the sting of rising electricity prices and with the amount of people affected and struggling to pay bills, it was only a matter of time before the government had to step in.

As long ago as December 9 2011, a Productivity Commission was asked to make a public inquiry looking into important elements of the National Electricity Market's (NEM) regulatory framework.

One of the aims of this inquiry was to find out if the current regulatory regime was delivering effective levels of network and generation investment across the National Electricity Market. The Productivity Commission presented the government with its final report on its findings on April 9 of 2013.

The final report included 63 recommendations including and related to benchmarking, incentive regulation, ownership, demand management, reliability standards, as well as the governance of National Electricity Market institutions. Furthermore, consumer engagement, and the efficiency of decision making in market reform were topics considered.

On June 26, the Australian government released its response to the Productivity Commission's findings.

Minister for resources and energy Gary Gray acknowledged what he described as 'comprehensive analysis' undertaken by the commission for the inquiry.

Mr Gray stated the recommendations matched with the ideas in the Council of Australian Governments' (COAG) energy market reform package which the government committed to in 2012. He also acknowledged that the Productivity Commission's report will provide a valuable input into COAG's ambitions for reform.

"The report is a valuable contribution to the identification of limitations in the regulatory environment that have contributed to the significant electricity price increases experienced by consumers in recent years," he said.

"The COAG reform package, which is being implemented by the Standing Council on Energy and Resources, is a comprehensive, coherent and well-considered suite of actions, to ensure that Australians do not pay more for electricity than necessary, through efficient electricity networks and a competitive wholesale electricity market."

He also noted that even in light of the current reforms, the government, along with local governments for states and territories will need to put in further efforts to deliver efficient outcomes for all electricity consumers.

The main takeaway from the final inquiry report is the need for the government to speed up reform processes where possible, with the acknowledgement that the success of reforms rely on ongoing commitment and support from all jurisdictions.

Posted by Charlie Moore