PIAC made a submission to the Australian Energy Market Operator’s (AEMO) consultation a draft Participant Fee Structure. The fee structure determines how AEMO recoups costs from various market participants and customers.
The submission supports AEMO’s general approach to charging fees, however is concerned with its proposal for recovering capital costs of establishing wholesale demand response (WDR) from Demand Response Service Providers (DRSPs).
We highlight the broad system and consumer benefits of WDR and that these benefits will increase as it develops and matures. We note charging DRSPs for the capital costs of WDR may discourage the provision of WDR by imposing costs on early entrants, stifling the development of the mechanism and the wider consumer benefits it brings. It also may impose an unfair cost on DRSPs as incumbent generators do not appear to pay fees for the capital costs they benefit from. PIAC recommends smearing the capital cost of WDR as its main beneficiaries are consumers and the market.