The Audit projects that demand for electricity infrastructure will grow more slowly than GDP over the 20 years to 2031, and Infrastructure Australia expects there will be sufficient generating capacity for at least the next five to 10 years. Consistent with this, recent draft determinations from the Australian Energy Regulator (AER) for electricity network companies will limit capital expenditure outlays for the next regulatory period (typically four or five years) to significantly lower levels than seen in recent years.246
Audit findings 64. Demand for electricity infrastructure is projected to grow significantly slower than GDP. 65. There is expected to be sufficient electricity generating capacity for at least the next five to 10 years. |
Overall, the NEM is working well, providing a competitive market which provides for the long-term needs of consumers in an efficient and properly regulated manner. However, future issues to be considered include:
■ ownership arrangements for energy utilites and infrastructure in NSW, Queensland, WA and Tasmania, where reforms (like those successfully introduced in Victoria and South Australia in the 1990s) would assist the market to become fully competitive and more sustainable;
■ how the recent rule changes might best facilitate tariff reform - the current regulatory arrangements provide little incentive for customers to manage peak consumption and its impact on the price of electricity (as the need to cater for peak demand adds to costs). Recent changes will support a transition to more cost reflective network tariffs by 2017;
■ incentives for efficient network investment and renewal at a time of falling demand, which the AER's draft determinations consider; and
■ network reliability investment based on assessment of benefits and costs. There is currently little assessment of the trade-off that consumers might voluntarily make between cost and reliability. However, work is underway from COAG and the Australian Energy Market Commission (AEMC) on this, with jurisdictions due to respond by mid-2015.247
Audit findings 66. The National Electricity Market is functioning well. However, several regulatory issues will require attention, including tariff reform to reduce peak period demand. 67. There is a need for continued government assistance to support electricity supply in remote communities where generation is not able to be provided on a commercial basis. |
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246. Australian Energy Regulator (2015)
247. Department of Industry and Science (2014c), p. 27