The Australian Energy Market Commission (AEMC) has started its annual review of the state of economic regulation for electricity networks.

The review considers how the economic regulatory framework can best support the continual evolution of electricity networks to facilitate consumer choices and the uptake of distributed energy resources like solar PV, battery storage, electric vehicles and ‘smart’ household appliances that respond to changes in electricity prices.

The 2018 review will focus on networks’ incentives to deliver services at the lowest possible cost.

As recommended by the Finkel review, this includes testing whether network businesses have a bias towards traditional network solutions over demand-side measures.

If a bias is found, the review will consider alternative models for network incentives and revenue-setting, including a total expenditure approach.

To help facilitate consultation on network incentives, a report investigating relevant regulatory frameworks in other countries has also been published.

The review will also build on the AEMC’s Distribution Market Model project, which looked at access and connection arrangements for distributed energy resources.

The review will consider the technical implications of more consumers installing distributed energy resources, and how access and connection arrangements may need to evolve in the future.

A final report setting out issues and options is due in July 2018. 

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