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Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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Page 1: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

Consumer Challenge Panelresponse to

NSW electricity DNSPs’Regulatory Proposals

10 July 2014

Page 2: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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Role of Consumer Challenge Panel

• National Electricity Objective - long term interests of consumers

• Challenge AER

• The CCP is a new beast and we are all feeling our way to some extent

Consumer Challenge Panel 10 July 2014

Page 3: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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• Thank you to Networks NSW and the DNSPs for engaging with us and for making the effort to help us understand their business drivers

• Members of the CCP working on the NSW electricity review are Bruce Mountain, Gill Owen, Jo De Silva, Mark Henley, and Ruth Lavery. If consumer groups wish to get in touch with us, they should contact John Skinner at AER

Consumer Challenge Panel 10 July 2014

Page 4: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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• Consumer Engagement• Reliability Standards• Use of Benchmarking• Step Changes in Expenditure• Demand Forecasts• Metering• Public Lighting

Consumer Challenge Panel 10 July 2014

Page 5: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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Consumer engagement

• CCP supports the AER’s guidelines – not prescriptive, no box-ticking

• Rely on consumer engagement that raises the right questions

• Not consumer engagement that informs consumers• Consumers need to understand the cost implications of

their preferences• Dubious to accept ‘step’ opex on consumer engagement –

should be a fundamental part of expenditure and actively integrated into existing opex – additional expenditure needs to be strongly argued

Consumer Challenge Panel 10 July 2014

Page 6: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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Reliability Standards

• Are NSW DNSPs’ reliability targets too easily achieved? Are DNSPs performing in excess of consumer desires?

• Have consumer desires been measured?• If the right questions about reliability had

been asked, would there be different reliability results?

Consumer Challenge Panel 10 July 2014

Page 7: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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Use of Benchmarking

• Benchmarking is an important tool for the AER• Every business will seek to distinguish themselves

and thereby diminish the importance of benchmarking by the AER

• CCP view is that every business will be better on some measures and worse on others – on balance benchmarking is appropriate and works

• If the AER is to stand as a surrogate for contestability, then it must place serious reliance on robust benchmarking

Consumer Challenge Panel 10 July 2014

Page 8: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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Step Changes in Expenditure

• Hard to see why expenses relating to decisions by management/shareholders about structure should be passed through to consumers

• Consumer engagement• Step changes need very careful analysis by

the AER – don’t embed step changes into future base expenses

Consumer Challenge Panel 10 July 2014

Page 9: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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Demand Forecasts

• CCP has some concern that the NSW DNSPs could be more responsive to systemic, lasting falls in demand

• DNSP forecasts should be reality-checked against AEMO forecasts

Consumer Challenge Panel 10 July 2014

Page 10: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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Metering

• CCP is alarmed at the size of exit fees proposed by Ausgrid in particular

• Consumers’ best long term interests lie in contestability

• Excessive fees will stifle contestability• CCP would like to see more engagement by

retailers (and will work with them)

Consumer Challenge Panel 10 July 2014

Page 11: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

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Public Lighting

• Consistency across DNSPs, different drivers and different levels of satisfaction

• CCP would like to see clear service standards articulated, and a binding agreement by DNSPs to abide by those service standards

• there may be more clarity about cost build up regarding confidentiality of model information,

• CCP would like to see contestability in public lighting provision

Consumer Challenge Panel 10 July 2014

Page 12: Consumer Challenge Panel response to NSW electricity DNSPs’ Regulatory Proposals 10 July 2014

Consumer Challenge Panel 10 July 2014

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• The preceding comments are general. • The CCP will be making a submission to the

DNSP proposals by the end of July, which will flesh out the comments made today and which will be made public