The Australian Energy Regulator (AER) has today released its final decision on methodology for the Values of Customer Reliability (VCR) review. The final methodology sets out the AER’s approach for developing VCR values for the National Electricity Market (NEM) and the Northern Territory.
The key components of the VCR methodology are the use of survey techniques to estimate VCRs for outages of up to 12 hours duration, and modelling techniques to estimate VCRs for widespread and long duration outages.
This final methodology is the result of an extensive consultation process commenced in October 2018. In that process we engaged widely with governments, energy regulators, customer and industry representatives and the public, as well as expert consultants.
The AER is scheduled to publish VCR values calculated in accordance with the final methodology in December 2019. We anticipate publishing VCRs for widespread and long duration outages derived from modelling techniques in the first quarter of 2020.
Background
Consumers should pay no more than necessary for safe and reliably energy. VCRs seek to reflect the value different types of customers place on reliable electricity supply under different conditions, and are usually expressed in dollars per kilowatt hour ($/kWh). VCRs link efficiency and reliability, playing a pivotal role in network planning and investment, and informing the design of wholesale market standards and settings, and network reliability incentives.
The AER is conducting a review to determine the values different customers place on having a reliable electricity supply.
The last review of VCR was undertaken in 2014 by the Australian Energy Market Operator (AEMO). Our review updates the methodology AEMO employed to determine VCR following a robust stakeholder consultation process.