Demand-side management of energy can save companies money and reduce major infrastructure spends 

The Australian Energy Market Commission has released a draft report proposing new ways for businesses and consumers to control their electricity use and manage rising energy bills.

The draft report released by the Power of Choice review includes proposals for change to every part of the electricity supply chain – enabling greater demand-side participation in the National Electricity Market (NEM) to help minimise costs of supply.

The draft report also identifies ways to give consumers the information, education, incentives and tools they need to manage their electricity use.

The review proposes reforms to the electricity market framework and rules to help make these changes possible.

The draft report also identifies the changes needed to encourage network operators, retailers and others to better support consumer choice and use flexible demand to delay investment in generation, poles and wires.

AEMC Chairman, Mr John Pierce, said the context in which electricity is produced and consumed has changed markedly over the past decade.

“While there is some evidence of demand side participation in the NEM, changes are needed to effectively allow the capture of short-term savings and long-term reductions in the overall costs of supplying electricity,” he said.

“This package of proposed reforms aims to support responses to evolving market, technology and consumer interest over the next 20 years.”

The Power of Choice review’s draft report recommends reforms to increase consumer participation in the market in a number of different ways. These include:

  • enabling large consumers or third parties,  acting on behalf of consumers, to participate in the wholesale electricity market and receive the spot price for changing their demand;
  • providing a greater range of pricing options to residential and small business consumers including the use of electricity tariffs that vary at different times of day and possibly in different locations; and
  • a new framework to encourage commercial investment in metering technology, and improved access to consumption data to inform consumer choices.

The draft report also sets out improved incentives for network service providers to consider using demand side participation on a broader scale to reduce the need for additional network investment, and new ways for consumers to sell their distributed generation (such as the use of solar panels, embedded generation or battery storage) to parties other than their retail electricity supplier.

The AEMC is doing further assessment on the impact the proposed recommendations might have on consumer bills.  They will report on this analysis when the review’s final report is released in November. 

Next steps 

A public forum will be held in Melbourne on 3 October and submissions on the draft report are due by 11 October 2012.

The review’s final report will go the Standing Council on Energy and Resources (SCER) on 16 November 2012.