The Impact of Consultations with Energy Consumer Advocates in the AEMC Rule-Change Process: A Study of the Outcomes of Energy Consumer Advocates

Abstract

The Australian National Electricity Objective states that the National Electricity Law operates to promote ‘…electricity services for the long term interests of consumers of electricity.’ Thus it has sometimes been said that the Australian energy sector has adopted a ‘consumer-centric’ approach to rule making and decision making within the National Electricity Market. This Report, which was commissioned by the Public Interest Advocacy Centre, uses a quantitative methodology to analyse whether this reflects the experience of consumer advocates, individuals, governments and community organisations participating in consultations as part of the Australian Energy Market Commission’s delegated legislative rule change process. In particular, this Report considered 571 submissions made throughout 34 rule changes processes to evaluate the relative weight given to submissions made by energy consumers in the final rule determinations relative to other stakeholders. The Report found that for most rule change processes, incumbent market players, such as electricity distribution, transmission and generation companies, were much more likely than energy consumers to have the recommendations in their submissions adopted. The Report outlines some of the reasons why this is likely to be the case, including failing to provide a response on all issues, providing a response which was outside the scope of the rule change process or relying heavily on anecdotal evidence, which was seen as being less persuasive than the expensive economic analysis used by the incumbent market players. The Report leaves the reader to conclude whether energy consumers simply do not know what is in their long term interests or whether there may also be a degree of industry capture of the rule maker at play.

Keywords: National Electricity Law, Australia, delegated legislation, rule change, National Electricity Objective, utilities, governance, consumer, incumbent market players

JEL Classification: K10, K30, Q4