No time to wait – rule changes to incorporate new emissions reduction objective must be fast tracked: CitiPower and Powercor

21 February, 2023

CitiPower and Powercor warn that distribution networks won’t be able to incorporate emission reduction benefits in their investments until the end of their next regulatory cycle unless rules are fast tracked to give effect to a Federal Government proposal to change the National Electricity Objective (NEO).

CitiPower and Powercor have welcomed the Federal Government’s proposal to include emissions reductions in the NEO and associated rules to achieve the nation’s clean energy transition.

In its submission to the Incorporating an emissions reduction objective into the national energy objectives consultation paper, CitiPower and Powercor urges the Federal Government to revise the draft Bill to require that the Australian Energy Market Commission makes immediate amendments to the national energy rules.

General Manager, Regulation Renate Vogt said the Australian Energy Regulator needed to be given the mandate now – not in years to come – to consider emissions reductions when assessing and deciding on the networks’ business plans and investments.

“Our networks operate on a five-year planning cycle and we can’t wait for rules to be changed when developing our proposals and making investment decisions,” Ms Vogt said.

“We are already well progressed on developing our 2026-2031 investment plans.  We know this is critical period under the energy transition if we’re going to meet the ambitious emissions reduction targets for 2030 and beyond.

“If these regulatory changes aren’t made, there is a risk our networks will not be able to invest in the projects and programs that we know will deliver the environmental benefits our communities want and expect.”

As a regulated business, CitiPower and Powercor’s investment plans are reviewed and approved by the AER every five years and is assessed under the National Electricity Rules (NER), which are made under the National Electricity Law (NEL).

Under the current rules, the AER reviews distribution network expenditure based on economic efficiency, looking at price, quality, reliability, and security of supply. If the Bill is passed and the Rules are subsequently changed, the regulator will need to also consider emissions reductions objectives.

Recent research by CitiPower and Powercor found residential customers were willing to pay an additional $9.00 annually on their electricity bills for better environmental outcomes. Environmental outcomes ranked as the second highest priority for network investment after bushfire safety.