The Australian Government has announced the release of the Energy White Paper – Green Paper 2014.

The Green Paper outlines the Federal Government’s policy approaches to the reform and regulation of the Australian energy market.

The goals outlined in the paper include:

  • Increasing Australia’s attractiveness for energy resources investment.
  • Reforms to electricity pricing, including electricity network tariff reform to limit cross-subsidies.
  • Encouraging increased gas supply and improved market operation.
  • Ensuring energy security, innovation and productivity.

Some of the key strategies to meet these goals include streamlining approvals processes, reforming electricity tariff structures, increasing customer access to data about their energy use, encouraging energy efficiency, encouraging privatisation, bringing forward new gas projects to meet demand and improving the flexibility and transparency of gas markets.

Further information can be found in the full report and executive summary.

Submissions from stakeholders on ways to meet the goals outlined in the Green Paper are welcomed.

Industry commentary

The Energy Networks Association (ENA) has welcomed the move. ENA CEO, John Bradley said the Green Paper adds to the growing momentum for electricity network tariff reform which can lead to fundamental changes in the way electricity is charged for and used.

“It is great to see a focus on electricity pricing reform, which will be essential to keep downward pressure on electricity costs, ensure fairness and that the grid can accommodate major changes in use,” Mr Bradley said.

“Current tariff structures also result in unfair cross subsidies between users, with the Australian Energy Market Commission recently identifying subsidies from most electricity customers of up to $700 per year to some air-conditioning consumers and $120 per year to some solar customers.

Mr Bradley said that ENA looks forward further progress on a coordinated pricing reform agenda in the lead up to the next COAG Energy Council meeting in December 2014.

“The Green Paper rightly recognises that the efficient use of smart meters will be critical to tariff reform and the long-term efficiency of Australia’s electricity system,” Mr Bradley said.

“Further work is required to ensure a metering framework that delivers benefits not only to individual consumers but to all consumers who depend on efficient, reliable and safe network services.

Mr Bradley said that ENA welcomes the Green Paper recommendation that action on a national framework for distribution and transmission reliability could be accelerated.

“Australian energy networks support reliability investments that achieve the performance and security which customers value and greater engagement of customers in the planning process.

Mr Bradley said that ENA also supported the Green Paper’s recommendation for further analysis of gas markets in Australia, as the sector faces the internationalisation of wholesale prices.

“ENA supports the Green Paper finding that competitive gas markets need good information access, community engagement, operational transparency and the removal of unnecessary barriers to upstream supply development.

ENA’s submission to the Energy White Paper discussion paper recommended securing and increasing the supply of gas to the domestic market through reducing duplication in the approvals process and increasing gas market transparency in upstream operations,” Mr Bradley said.

The Energy Retailers Association of Australia (ERAA) also welcomes the proposed reforms.

Chief Executive, Cameron O’Reilly said the ERAA welcomes the Federal Government’s proposal to streamline the energy market towards a more national approach as it will help to reduce long term cost pressures on households and businesses.

“This recommendation complements the Draft Competition Policy review, which was released yesterday, recommending that Western Australia and the Northern Territory should be included in the National Electricity Market,” he said.

“A national energy market will create a consistent framework for all consumers. It will harmonise state based regulatory frameworks, remove unnecessary duplication and break down the bureaucratic red-tape,” Mr O’Reilly said.

“The ERAA has long held the view that an integrated approach to regulation will promote more efficient retail energy markets and that regulation is only introduced to address market failures,” he said.

Mr O’Reilly said the Green Paper also recommended reforms to further deregulate prices in the retail gas and electricity market, a move which the ERAA supports.

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