Legal development

Australian electricity and gas markets – June 2024 Update


    In our June update, we take a look at the latest rule changes and market updates affecting participants in the Australian electricity and gas markets.

    What you need to do

    Stakeholders should note the market updates below, and note any impacts on their compliance obligations.

    National Electricity Rules and National Gas Rules

    On 3 June 2024, the Australian Energy Market Commission (AEMC) received three rule change requests from the Minister for Climate Change and Energy concerning the development of the Integrated System Plan (ISP) under the National Electricity Rules (NER) and National Gas Rules (NGR). These requests follow the work of the Energy and Climate Change Ministerial Council (see here and here), and seek to improve the robustness of the ISP's forecasts by:

    1. expanding the ability of the Australian Energy Market Operator (AEMO) to analyse gas market information as an ISP input. To do so, the Better Integrating Gas into the Integrated System Plan rule change request proposes amendments to the NER and NGR that would:

    • oblige AEMO to publish gas market projections and undertake an expanded consideration of gas generation, supply, and infrastructure, including costs, when preparing the ISP; and,
    • ensure AEMO has the power to access, use, and disclose information gathered for NGR purposes to support the gas analysis within the ISP,


    2. improving the quality of the analysis underpinning AEMO's demand projections and its assessment of the additional utility-scale generation required to meet that demand. The Improving consideration of demand-side factors in the Integrated System Plan rule change request suggests a series of amendments to the NER that would require AEMO to:

    • include a statement on the expected development and operational behaviour of both consumer energy resources and distributed resources in the ISP; and,
    • develop guidelines (in consultation with the Australian Energy Regulator (AER)) to set out a consistent process to collect information from Distribution Network Service Providers (DNSPs) on anticipated network constraints and electrical pathways.

    3. elevating the importance of community sentiment within the ISP by obliging AEMO, under the NER, to have regard to known community concerns when developing transmission expansion options (see the Incorporating community sentiment towards transmission expansion options in the Integrated System Plan rule change request).

    A joint consultation paper was published on 20 June 2024 regarding the above rule change requests. 

    Stakeholders are invited to submit feedback by 18 July 2024.

    On 20 June 2024, the AEMC released a consultation paper in response to the Minister's rule change request to establish cyber security as one of AEMO's responsibilities under the NER. The rule change request proposes to explicitly reference cyber security in the NER (as it relates to power system security), and impose additional cyber security preparedness functions upon AEMO including coordinating a NEM cyber incident response plan, supporting preparedness and providing advice, and distributing critical cyber security information to participants.

    Stakeholder feedback is sought by 18 July 2024, with a draft determination set to be published on 26 September 2024. For more information or to make a submission, see here

    Also on 20 June 2024, the AEMC published a draft determination and more preferable draft rule as part of its Providing flexibility in the allocation of interconnector costs rule change project. The draft rule proposes amendments to the NER that would allow different jurisdictions to agree on the cost allocation for new regulated interconnectors, as well as providing a pathway for implementation of interconnector costs allocation agreements. 

    The AEMC invites written submissions by 1 August 2024. For more information on this rule change project, see here.

    On 27 June 2024, the AEMC released its final determination and final rule on its Enhancing investment certainty in the R1 process rule change. The final rule introduces a series of amendments to the NER to improve investment certainty in the pre-connection registered data (R1) process. Specifically, the final rule:

    • formalises the commencement and conclusion of the R1 process;
    • clarifies the obligations of all parties during the R1 process;
    • requires AEMO and NSPs to provide written reasons for additional data and information requests during an R1 assessment (from the outset);
    • removes barriers to sensible revisions of a generator's performance standards;
    • allows AEMO to conditionally register generators to streamline connections; and,
    • requires AEMO to add new information in its registration information resource and guidelines.

    The final rule takes effect from 11 July 2024.

    National Energy Retail Rules

    On 20 June 2024, the AEMC published a final report for its Review into the arrangements for failed retailers' electricity and gas contracts project. Following the unprecedented number of retailer failures in 2022 and 2023, the review makes recommendations to simplify and improve gas directions under the Retailer of Last Resort (RoLR) scheme and improve the scheme for electricity and gas RoLR events.  

    These recommendations largely involve amendments to the National Energy Retail Law (NERL). For a summary of the anticipated benefits of such recommendations, see here and here.

    Other Updates

    On 26 June 2024, AEMO published its 2024 Integrated System Plan, outlining an updated 25-year roadmap for the transition of the NEM to net-zero by 2050. The 2024 ISP makes several key findings:

    • Renewable energy, connected with transmission and distribution, firmed with storage, and backed up by gas-powered generation, is the lowest-cost way to supply electricity to homes and businesses as Australia transitions to net-zero;
    • The lowest-cost path to meet state and Federal Government energy policies on emissions reductions will have an annualised capital cost of AU$122 billion by 2050;
    • Roughly 10,000km of new transmission lines are required by 2050 to connect new sources of generation, with ten projects (or 2,500km) already underway;
    • The construction and maintenance of infrastructure over the next 20 years is expected to support more than 60,000 energy jobs; and,
    • Gas is expected to play a critical role in back-up electricity generation. Other crucial technologies include smart systems, electric vehicles and domestic rooftop solar panels and associated batteries.

    For more information, see here and here.

    On 27 June 2024, the AEMC Reliability Panel released a final report in its Review of the form of the reliability standard and administered price cap (APC). The Panel's final recommendation is to maintain the current form of both the reliability standard and APC.

    Authors: Dale Gill, Partner; Andre Dauwalder, Counsel; Alexandria Brown, Lawyer; Murray Rissik, Graduate and Nicholas Buntain, Seasonal Clerk. 

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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