Next steps in distribution pricing review
In November 2015 we published the Implications of evolving technologies for pricing of distribution services consultation paper. Submissions showed widespread agreement that a move towards more service-based and cost-reflective distribution pricing is needed to promote efficiency for the long-term benefit of consumers.
We want to facilitate industry-led adoption of efficient distribution pricing.
We held a conference on 17 August 2016 to gather further information on several matters about a move towards more service-based and cost-reflective distribution pricing. At the conference there was a clear consensus among consumers and electricity industry participants that distribution price structures need to change.
We will continue to facilitate the industry-led approach and intend to:
- Monitor and report on distributor progress towards adopting efficient distribution price structures.
- Review the current distribution pricing principles and associated information disclosure guidelines and consult on any proposed changes.
- Assess alignment of distributor prices against the distribution pricing principles (each year from April 2018).
We expect industry participants to continue to progress their work. Specifically, our expectations are that:
- The ENA will continue to lead the development of more efficient pricing. We note the ENA will shortly release its New Pricing Options for Electricity Distributors consultation paper.
- Before 1 April 2017, each distributor will have published its plan for introducing efficient pricing. The purpose of setting a timeframe is to encourage distributors to communicate their intentions and to make progress. Information that we would expect to see in these plans includes:
- a clear outline of the process each distributor will adopt, including the nature of their planned consultation with retailers and consumers
- a timeline with the key milestones
- resourcing implications, including how resources will be allocated to the process of moving towards efficient pricing structures.