Submission to the AER Review of Incentive Schemes for Regulated Networks – Draft Decision

PIAC provided a response to the Australian Energy Regulator’s Review of Incentive Schemes for Regulated Networks (the Review) – Draft Decision (the Draft). The Review sought feedback on the efficacy and suitability of a range of incentive schemes that apply to regulated electricity and gas networks. The Draft sought to implement changes that would make incentive schemes fit-for-purpose.

We argued that the Draft failed to address fundamental issues with incentive schemes which have resulted in sector-wide overcompensation for average or below average performance and efficiency.

We did not consider the draft decision in the long-term interests of consumers and questioned the merit of retaining incentive schemes that are overly generous to networks and of little demonstrated benefit to consumers.We suggested that this review should be an important opportunity to examine the role and performance of incentives in delivering better outcomes for consumers.