regulation's role in demand management and renewables: reflections from the experience in...
Post on 11-Jan-2015
1.235 Views
Preview:
DESCRIPTION
TRANSCRIPT
Forum on Sustainable Energy, Good Governance and Electricity Regulation
Regulation’s role in demand management and renewables: reflections from the
experience in Australia
Eric GroomPrincipal Advisor, IPART
Singapore, 17 March 2008
Drivers for DM and RE
Societal/externalities Environmental Access Local development Affordability
Wholesale/retailNetwork
Role for regulator
Context/country specificDepends on – for example
Institutional/political framework Market structure
Varies over time… and between different activities of
regulator?
IPART’s role
Established 1992 – multi-sector utility regulator ‘Long’ involvement in DM issues
1996 reviewDelineation of role of regulatorHybrid revenue cap
1999 review Full revenue capPricing principles
2002 DM and RE review for government 2004 review
Price Cap + D factorEmissions Trading Scheme
Network regulation
Two key aspects
1. Form of regulation and the incentives created
2. Pricing ‘positive pricing’ i.e prices that reflect costs
by locations ‘negative’ pricing or payments to reduce load
on networks to reduce congestion and avoid capex
Network regulation and DM and RE
Many challenges to DM and RE – not least are cultural and planning biases
But regulation can also create bias in short term
Price cap is a strong disincentive due to the lost revenue
In long termUncertainty over treatment of capex and perceived
bias towards traditional options And regulators have a role in ensuring bets
practice planning process and opportunities for participation of DM and RE projects
IPART’s experience with network regulation
IPART started with hybrid revenue cap and full revenue cap
‘Best solutions’ to short term bias but ineffective. Why? Long term uncertainties remained Strong bias to selling more electricity in
utilities Difficult concept for advocates within utility to
sell
D factor
In 2004 Tribunal adopted price cap with D-Factor.
D Factor is an add-on designed to correct for problems of price cap. Adjusts for impact of lost revenue from
foregone sales allows for recovery of direct expenditures on
DM up to cost of network alternatives allows for the retention of cost savings by the
utility for the regulatory period
Network DM projects under D-factor
Impact on network investment
Program is still small But relative to the size the capex savings are
significant
Over 2 years EA avoided $11m and IE avoided $12m
Trend: small (eg sub $1m) deferred indefinitely, larger projects for 1-2 years
Emissions Trading
Outline of the scheme
Obligation to reduce greenhouse gas emissions attributable to retailers Target: reduce from 8.65 to 7.27 tCO2e per capita by 2007
Emission reduction certificates can be created through low emission generation energy efficiency carbon sequestration large user changes to production process
Interstate activities included Certificates are tradeable Obligations met by acquitting certificates Penalty: $10.50 per tCO2-e(not tax deductable) if target
not met
Role of the Regulator
The regulator (IPART) Monitors compliance with the target reductions in
emissions and imposes penalties Performs the scheme administration role
Scheme administration is not a regulatory function and need not have been given to IPART IPART established it as a separate stand-alone activity
to facilitate a future change in responsibilities
Structure of the Scheme
Issues in Implementation
Responsibility for making good ‘bad certificates’ is with creator Certificates, once registered, are ‘good
currency’.Benchmarks for existing generators and
concern at ‘windfall gains’Inclusion of inter-state activitiesMeasurement and verification of energy
efficiency programs
Assessment
Targets achieved 200 accredited providers – over 100 in DSA 60 million certificates issued – 1/3 for DSA
Implemented with few resources, relatively quickly Reliance on third party auditors has developed capacity,
aided learning Main criticisms: generous rules on allowed generating
activities – but policy issue; administrative ‘learnings’ stand Facing critical transition – oversupply, declining price and
uncertainty about future. Key Transition to national cap and trade scheme on emitters Separate EE certificate scheme
top related