The Australian Energy Market Commission is consulting on a rule change to place responsibility for developing and periodically reviewing estimates of the Value of Customer Reliability (VCR) to the Australian Energy Regulator. VCR represents the value which different types of customers place on receiving a reliable electricity supply under different conditions and is used in a variety of processes to test whether a decision or action does, indeed, provide a net benefit to consumers. The VCR had previously been developed by the Australian Energy Market Operator.
PIAC strongly supports the proposed rule change as it will help ensure that decisions regarding market design, regulation, planning and investment are indeed in the long-term interests of consumers. Having the AER as the single national body responsible for establishing the VCR will encourage consistency and confidence in the results. PIAC also recommends the AER publish a Guideline for applying the VCR in a variety of potential applications to encourage consistent and accurate use of the results.
While PIAC suggests the AER should retain discretion to develop the detailed aspects of the VCR methodology, PIAC considers it would be beneficial for the Rules to include greater direction on matters the AER must have regard to in developing its VCR. We list a number of these in our submission.