The Australian Competition and Consumer Commission has issued its determination on proposed code changes relating to network pricing and market network service providers (MNSPs) in the National Electricity Market (NEM).
"The proposed changes are a key component of the NEM design", Mr Rod Shogren, Commissioner responsible for energy matters, said today. "They deliver public benefits through efficient utilisation of and investment in network assets, as well as optimal electricity production and consumption decisions. The network pricing arrangements will also impact on the effectiveness of the NEM access regime. An effective access regime is essential to the realisation and pass through of the benefits of upstream and downstream reform and competition.
"The ACCC also considers that there are public benefits from NECA’s proposal to allow MNSPs to operate in the NEM. MNSPs will provide a source of competition for generators in an importing region and facilitate inter-regional trading where the owner of the MNSP sells financial hedges to market participants".
In its original authorisation of the code the ACCC expressed its concerns that the code's network pricing arrangements provide little incentive for the efficient location of investment in network or generation options.
"The ACCC considers that its original concerns regarding investment and location incentives have not yet been fully addressed. The ACCC has therefore imposed conditions of authorisation to address these concerns and require further work on the scope for improvement of the network pricing arrangements. Such work will consider:
- greater integration of transmission signals into the energy markets;
- improved usage pricing;
- an effective beneficiaries-pay approach to new network investments; and
- financial transfers to support a market-wide user-pays approach to the existing network and uniform general charges".