For Craig Memery and Anna Livsey
Consumers have said they are willing to reduce energy consumption at peak hours. (AAP: Alan Porritt)
Today, the Australian energy market regulator took a historic decision that could reduce energy prices, prevent shutdowns, help reduce emissions and return money directly to consumers' pockets .
The decision of the Australian Energy Market Commission to introduce a response mechanism to wholesale demand is a great victory for consumers.
But, unfortunately, families will be lost because, for now, the Commission has restricted the response of the demand to industrial and commercial users.
And this is a great victory for retailers who have struggled to maintain market control in response to demand and prevent households from participating through providers that are not retailers.
As noted by the head of the Australian Competition and Consumer Commission, Rod Simms, commenting on the decision: "Retailers do not want this to happen. Let's be clear: the management of the lawsuit has been in the hands of people who They really give "I have a lot of incentive to use it. "
How it works
The answer to wholesale demand is a system that pays users of energy to reduce their energy consumption when demand and wholesale prices are high.
In hot days, when everyone has their air conditioning activated and demand for electricity is at its peak, more generators are started up and wholesalers charge more electricity.
The decision will allow a new participant in the energy market, a demand response service provider, compete against generators in the wholesale market and provide a response to the demand of participating consumers.
With the response to demand, participating energy users are paid directly, but energy prices are reduced to everyone because the generation of high prices is reduced to the reduction in demand. When prices are high, it is cheaper to reduce the demand than to increase the supply.
This means that, although all consumers will see the advantages of lowering wholesale energy prices, only large users can pay directly to reduce their energy consumption.
This is despite the fact that families are the majority of energy users and research from Energy Consumers Australia, which indicates that more than half of consumers are willing to reduce energy consumption at peak hours and are still more willing to act with financial incentives.
In the system of response to wholesale demand, energy users will pay to reduce energy consumption when demand and wholesale prices are high. (Dean Lewins, photo of the file: AAP)
Only 1 in 23 retailers offer the service
Retailers maintain that people should go through them to respond to the demand and say that the current agreements, where they have the market demand response keys, work well. But are they?
In February 2018, the investigation of the Public Interest Intervention Center showed that only 1 out of 23 NSW retailers responded to the demand of residential customers when contacted. This study was repeated a year later. Again, only a small retailer was found that offered a response to the demand.
These results show that even if a home was aware of the response to demand, it is unlikely that a retailer will be prepared to do so and, if they do, they should surely change the retailers to participate. And if a home wants to use a demand-response provider, the provider must negotiate with the existing retailer of the home to provide the service. Retailers are, therefore, a monopoly not prepared to deal with suppliers in response to demand.
The low current levels of demand response to the wholesale energy market show that retailers are not interested in responding to demand. The investigations conducted by the Australian energy regulator found that the wholesale response of retailers demand decreased between 2017 and 2018.
So why are consumers losing?
The reason for the Australian Energy Market Commission to preserve this status quo is that new consumer protection must be established before new demand-response service providers enter the domestic market.
It is not necessary to exclude homes indefinitely. Australian consumer legislation already offers key protections that people need for contracts, and there are options to respond to the demand for households that do not pose a risk to quality of life. Some of these options, such as those that use billiard pumps and domestic batteries, are flexible and offer a great deal of value to the market and should be included from the first day.
The Commission is totally right to decide that it is necessary to address the problems of protection of residential consumers. But most can be easily resolved and you do not need to delay delivering the potential benefits of responding to the demand of all.
He says he will review the need for energy-specific consumer protection during the next 12 months, but this does not guarantee that families can participate in responding to the demand at the end of it.
There is no need for a general exclusion to families that access the response to the lawsuit. Exclude people who need it most to collect all the benefits of this new historical reform.
In the coming months, as the Australian Energy Market Commission finalizes its decision, it should develop a plan to make this good reform a major reform and ensure that families can access the benefits when the S & # 39; introduced in 2022.
Craig Memery and Anna Livsey are advocates of energy consumers at the Public Interest Accession Center.
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