EUAA Submission: Value of Customer Reliability Rule Change

EUAA Submission: Value of Customer Reliability Rule Change

Emily Wood | June 8, 2018

The EUAA is a strong advocate for energy users and firmly believes that the primary objective of energy markets should be to serve the long-term interests of the consumer as stated in the NEO and NGO. There can be no doubt that energy users, both large and small, are experiencing unprecedented increases in both electricity and gas costs while there are potentially significant risks to both the availability and reliability of energy for some. This situation is clearly at odds with both the NGO and NEO.

In this context, the EUAA welcomes the opportunity to comment on the COAG Energy Council proposed rule change relating to the appointment of the Australian Energy Regulator (AER) as the entity responsible for establishing the Value of Customer Reliability (VCR).

In summary the EUAA:

  • Supports the COAG Energy Council’s proposal to treat the rule change request as non-controversial and hence can be processed on an expedited basis.
  • Supports the AER assuming responsibility for establishing the value of customer reliability (VCR).
  • Supports the rule change including high level objectives, particularly around the involvement of consumers on both the development of the methodology and direct engagement to establish VCR values. Further to this we support that the detailed methodology should be responsibility of the AER to develop.
  • Proposes that the first estimated VCR values should be published by 30th June 2019 to fit in with the cycle of regulatory determinations due in April 2020 and that they be updated annually. This will also be important to the current Integrated System Plan being developed by AEMO and the Reliability Guarantee being developed by the ESB.
  • Proposes that these new values should apply to any network evaluation of RiT-T, RiT-D and contingent projects.
  • Supports the AER following the Rules consultation procedures and that as part of this it forms a Consumer Reference Group to support this consultation.
  • Supports the proposed 5-year reviews and updating of the methodology.
  • Emphasises the importance of having consistent measures of VCR that are then applied across all aspects of electricity market policy development and investment evaluation.
  • We support the amendments to the Rule to require the Reliability Panel to have regard to the AER VCR values.

We are surprised that the Consultation Paper makes no mention of how the VCR values will be implemented. We look forward to AEMO and the State jurisdictional regulators indicating their support for using the AER VCR values in all of their electricity market studies.

We would propose an additional clause in the proposed 8.12 that:

  • Makes it mandatory for networks to apply the AER VCR values in their revenue reset proposals and in their evaluation of RiT-T, RiT-D and contingent project proposals,
  • But gives them the option of also proposing an alternative measure with the AER having the sole discretion of whether to accept this alternative measure.


To read our full submission including responses to substantive issues, please download the attached document.

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