The Australian Energy Market Commission (AEMC) has released a statement of priorities for energy market development.

The AEMC has developed three priorities, in consultation with industry and consumers, which will help guide their advice to governments and their approach to rule making.

1. Consumer priority – Strengthening consumer participation and continuing to promote competitive retail markets

The consumer priority is about enabling consumers to confidently participate in all parts of the energy supply chain where they desire to do so. This reflects an environment in which consumers are presented with greater opportunities for active participation as technologies advance; as retailers differentiate their offerings; and competition increases.

One of the key issues raised for this priority is re-structuring network tariffs. More flexible, cost-reflective prices would provide incentives to reduce peak demand and minimise the cost of our electricity system over the longer term.

The AEMC will look to address these issues in its assessment of a request by the Standing Council on Energy and Resources (SCER) to change distribution pricing arrangements. The rule change would require network charges to be based on the drivers of network costs as far as possible so that consumers can see the value of their consumption choices (such as reducing power use at peak times) and pay prices that reflect the impact of their consumption decisions on network costs.

2. Gas priority – Promoting the development of efficient gas markets

The gas priority identifies the need for a strategic gas market development plan within which the industry can work towards a more mature and well-functioning market.

There is little disagreement among participants that the eastern gas market is experiencing a period of significant change. But there is some uncertainty about what these changes mean and the direction that gas market development should take over the next 10 to 15 years.

The scale of the changes occurring in the gas sector means that it is important to evaluate whether the existing downstream market framework continues to be well suited to the new environment in which they are now placed.

The AEMC will continue to work with SCER, the Australian Energy Market Operator, the Australian Energy Regulator and stakeholders more broadly on a pathway to support the development of Australia’s gas markets.

3. Market priority – Supporting market arrangements that encourage efficient investment and flexibility

The market priority is concerned with the way market, regulatory and policy environments interact and impact prices and investment. This reflects the importance of predictable but flexible market arrangements, and of open and transparent processes for change.

For more information, see the report Strategic Priorities for Energy Market Development 2013 on the AEMC website.