Energy sector rule-maker resigns

By Shannon Jenkins

Monday October 28, 2019

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The head of the agency in charge of regulating Australia’s energy market has stepped down.

Chief executive of the Australian Energy Market Commission Anne Pearson has resigned after more than a decade with the agency.

Chair John Pierce said she has made valuable contributions during her 12 years with the agency.

“Under Anne’s stewardship, the AEMC has responded to unprecedented change across the energy sector and risen to the challenge,” he said.

“Her professionalism and personal commitment to working in the interests of Australian consumers have underlined the organisation’s reputation for delivering high integrity, expert work as statutory rule maker and strategic adviser to Council of Australian Governments energy ministers.”

The agency recently released two discussion papers calling for comprehensive reform of the electricity market to “keep the lights on at least cost”.

It said the energy market would need to start “future-proofing the transmission access regime” immediately, as renewable plants that would be smaller and more dispersed than coal-fired power plants would likely be common in the future.

The plans proposed reforms to wholesale electricity pricing and transmission rights, which the AEMC argued would prompt generators to build in more cost-effective parts of the national grid. 

While generators in a region of the National Electricity Market would currently all receive the same return on the energy they generate, despite being in different locations, the AEMC has proposed that large-scale generators would be paid a “local price” for their power at the wholesale level. This would better reflect the “marginal cost of supplying electricity at their location in the network” and would encourage large-scale generators to connect to less congested parts of the grid, as they would see higher returns.

The AEMC also proposed the introduction of “financial transmission rights”, which generators would purchase in order to use the grid. It said these changes would “improve financial certainty for generators”, and would “go to consumers to offset the money they have paid to build the transmission network”.

Key stakeholders have questioned the complexity of the changes, according to the Australian Financial Review, and warned that they “should not be rushed”.

Pearson was appointed to chief executive of the AEMC in early 2016. The agency’s executive general manager of security and reliability, Suzanne Falvi, will take on the role until a replacement for Pearson has been found.

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