Transcript Advocacy and Empowerment Workshop

Network Regulation Rule
Change Proposals
The impacts on your customers….
Janine Rayner
November 2011
Consumer Action
Who we are
 Melbourne based organisation
 Funded largely by Victorian Legal Aid and
Consumer Affairs to provide free legal
advice and financial counselling advice, to
vulnerable consumers.
 Energy policy work funded by Consumer
Advocacy Panel
Consumers
Basically – consumers want:
 To be able to turn their lights on
 To pay a fair and reasonable price for their
energy use
 For their energy bills to be manageable
within their household budgets
 To be protected from predatory or unfair
behaviour
State of the current regulatory
framework
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The current regulatory framework is failing
consumers.
The rules and their application are too weak
to counter the power and superior
information position of the huge energy
network businesses.
Consumers are paying too much.
Where are consumers?
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The cost of energy is rising and a significant
component of this is distribution prices
Over $55 billion of charges from consumers
– flying under the radar
Consumers are facing difficulty with the
broader cost of living – this includes energy
bills
Prescription or discretion
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A balance needs to be struck in the context
of access to merits review.
Focus must be on discouraging distribution
businesses engaging in the expensive and
time consuming process
Refocus the debate on the AER process –
not the merits review
The Rule change proposals
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Evidentiary burden needs to be placed on
the businesses to prove that the proposed
forecasts do reasonably reflect prudent and
efficient costs.
The Rules need to more fully ensure
network expenditure is carried out when
and where it is necessary rather than based
on how businesses can further profit from
it.
Changes need to reduce incentives to over
invest by limiting what gets rolled into the
regulatory asset base.
The Rule change proposals
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There is currently a significant amount of
time, energy and ultimately consumer’s
money focused upon increasing the WACC
to maximise the returns to business
This requires more scrutiny by the policy
makers to ensure that the AER has
significant power to ensure that the returns
to businesses capture the needs of
consumers in lower prices (rather than
lining the pockets of a few).
The Rule change proposals
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Available resources
Contrasts to the time the AER or other
stakeholders can input into the process.
A need for more onus to be placed on
distribution businesses to substantiate their
claims
Information is opaque and overwhelming in
amount
This precludes the necessary scrutiny to
ensure a balanced process.
Are the rule changes enough?
Need to go further than the rule changes
proposed
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The merits review process
Seek much more input from consumers
earlier in the process, to demonstrate that
business proposals are in the interests of
consumers.
The adequacy of the NEO
Consumer Action Law Centre
Level 7, 459 Little Collins Street
Melbourne VIC 3000
www.consumeraction.org.au
Tel: 03 9670 5088