Cost recovery Administrative simplicity Flexibility in amounts Transparency Minimising of mechanism recovered monitoring & compliance Legislative obligation on distribution There are only 5 DBs with a fixed DBs can adjust network DBs are regulated by the AER A framework for monitoring businesses (DBs) number of customers. This will tariffs on a 6-monthly or and are required to submit a compliance with regulatory result in administrative ease annual basis in line with breakdown of costs which requirement cost pass where scheme costs are spread changing scheme costs must be approved by the AER throughs is already in place based on the relative loads of (requires AER approval) before they can be passed on each business to customers Legislative obligation on electricity The customer bases of different Victorian retailers are not Retailers currently operate in Monitoring of cost recovery retailers retailers are constantly changing subject to price regulation a market free from practices would require a due to switching, making it very and therefore will be able regulation. There would be no new compliance framework hard to calculate each retailers to pass on scheme costs as requirement on them to to be established to liability under the scheme based they change over time. disclose how scheme costs undertake this role. With on the load of their customers. were passed on to customers. more than 15 active retailers New retailers are also currently in the market the continuously entering the market, costs of doing so are likely to with others leaving. be significant. Legislative obligation on the State’s one As there is only one AusNet Services can adjust AusNet Services as the A framework for monitoring transmission transmission business in Victoria, its network tariffs on a transmission network compliance with regulatory business also with a fixed customer base. or annual basis in operator is regulated by the requirement cost pass This would make calculating line with changing scheme AER and required to submit a throughs is already in place scheme liabilities based on costs (requires AER breakdown of costs which relative customer loads very approval) must be approved by the AER simple. before they can be passed on to customers
Cost recovery mechanism Administrative simplicity Flexibility in amounts recovered Transparency Minimising of monitoring & compliance Legislative obligation on distribution businesses (DBs) There are only 5 DBs with a fixed number of customers. This will result in administrative ease where scheme costs are spread based on the relative loads of each business DBs can adjust network tariffs on a 6-monthly or annual basis in line with changing scheme costs (requires AER approval) DBs are regulated by the AER and are required to submit a breakdown of costs which must be approved by the AER before they can be passed on to customers A framework for monitoring compliance with regulatory requirement cost pass throughs is already in place Legislative obligation on electricity retailers The customer bases of different retailers are constantly changing due to switching, making it very hard to calculate each retailers liability under the scheme based on the load of their customers. New retailers are also continuously entering the market, with others leaving. Victorian retailers are not subject to price regulation and therefore will be able to pass on scheme costs as they change over time. Retailers currently operate in a market free from regulation. There would be no requirement on them to disclose how scheme costs were passed on to customers. Monitoring of cost recovery practices would require a new compliance framework to be established to undertake this role. With more than 15 active retailers currently in the market the costs of doing so are likely to be significant. Legislative obligation on the State’s one transmission business As there is only one transmission business in Victoria, also with a fixed customer base. This would make calculating scheme liabilities based on relative customer loads very simple. AusNet Services can adjust its network tariffs on a or annual basis in line with changing scheme costs (requires AER approval) AusNet Services as the transmission network operator is regulated by the AER and required to submit a breakdown of costs which must be approved by the AER before they can be passed on to customers A framework for monitoring compliance with regulatory requirement cost pass throughs is already in place
Consultation-paper-Victorian-renewable-energy-auction-scheme.docx