Electricity, gas, water and sewage prices around Australia are structured with a high fixed charge per customer and very low usage (per unit) charges. This does not encourage efficiency as customers are not rewarded for saving resources.

The regulation of the national electricity market should be amended so that in a hierarchy of demand management, energy efficiency and renewable energy are considered before the network can be expanded. A good model for this is California’s energy market.

Utility pricing should be altered to dramatically reduce the fixed charge and increase per unit costs to encourage energy and water saving. This would also provide savings to low-income households who end to be lower-utility consumers (due to smaller homes and fewer appliances).

Introduce an environmental objective

The national energy market does not currently take the environment into account. The federal government should reform the National Electricity Law to include an environmental objective such as: ‘The Market Environmental Objective is to contribute to achieving ecologically sustainable development and is to have regard to the effect n the environment of the generation, transmission, distribution, supply and use of electricity and related activities including achieving a permanent reduction in the total emissions of greenhouse gases.’

Ensure the NEM supports climate change mitigation

The Federal Government could direct the Australian Energy Markets Commission to conduct a public inquiry to report on changes required to ensure the National Electricity Law and the national electricity market facilitates, rather than obstructs, national emission reduction goals.

We need dynamic pricing and a smart grid

The Australian Energy Regulator should expeditiously investigate and report on the potential for energy savings using dynamic pricing for transmission and distribution networks.