Australian electricity and gas markets - April 2023 update

What you need to do:

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

National Electricity Rules 

On 20 April 2023, the Australian Energy Market Commission (AEMC) released its final rule and final determination as part of its Efficient reactive current access standards for inverter-based resources rule change. The changes aim to make investment in renewables cheaper and improve system security by providing increased flexibility for wind, solar and battery technology providers to negotiate on investment in voltage support equipment. The final rule will achieve this by: 

• lowering the reactive current capability requirement to a level greater than, but not equal to, zero;
• reformulating existing requirements to incentivise a fast and stable response;
• clarifying the rules on active power recovery and the voltage at which reactive current responses should commence, to support faster connection negotiations; and
• addressing issues with the definitions for maximum continuous current and continuous uninterrupted operation.

The new rule commenced 27 April 2023. The AEMC notes that the Australian Energy Market Operator (AEMO) is reviewing the Access Standards framework and is seeking stakeholder feedback on elements of the access standards that are related to this rule change. For more information, see here. 

National Energy Retail Rules

No retail rule change requests were initiated in April. No AEMC determinations relevant to the National Energy Retail Rules were published. 

National Gas Rules

No gas rule change requests were initiated in April. No AEMC determinations relevant to the National Gas Rules were published.

Other updates

On 4 April 2023, the Australian Energy Regulator (AER) released a communications statement which expands the scope of the streamlined assessment process for low risk battery distribution ring-fencing waivers. The process enables the streamlined assessment of applications for Distribution Network Service Providers (DNSPs) to lease spare battery capacity to other parties, and was originally limited to applications from clause 3.1 of the Electricity Distribution Ringfencing Guideline. The AER's communications statement extends the scope of this process to include applications from clauses 4.2.1 and 4.2.2. 

On 6 April 2023, the AEMC Reliability Panel published a final determination and revised standard for its review of the Frequency Operating Standard (FOS). The key elements of the revised FOS include: 

• new system limits for rate of change of frequency following contingency events;
• changes to the limits and thresholds for contingency events;
• changes applicable to the FOS during system restoration following major system disturbances;
• confirmation of the target frequency, the allowable ranges for frequency during normal operation and the primary frequency control band; and
• the removal of the limit for accumulated time error.

The revised FOS will come into effect from 9 October 2023.

On 6 April 2023, the AER released an issues paper to consult on its development of Gas Pipeline Information Disclosure Guidelines. The paper sets out the AER's proposed position on key issues such as what financial information must be published, the valuation of assets and how information must be published. The AER is inviting stakeholder submissions on the issues paper until 9 May 2023.  

On 13 April 2023, the Department of Climate Change, Energy, the Environment and Water (DCCEEW) released a draft bill and consultation paper  following the Energy and Climate Change Ministerial Council (ECMC)'s decision to expand the AER's Wholesale Market Monitoring and Reporting (WMMR) functions. The proposed reforms to the National Electricity Law (NEL) and National Gas Law (NGL) aim to: 

• remove provisions that currently inhibit the AER’s electricity wholesale market monitoring function; 
• empower the AER to monitor contract markets;
• create an explicit wholesale market monitoring function for gas; and
• create additional requirements for the AER in connection with its extended wholesale market monitoring powers.

The DCCEEW is seeking submissions on the draft bill and consultation paper by 4 May 2023. 

On 20 April 2023, the AER published Wholesale markets quarterly report for Q1 2023. The report, which covers January to March 2023, analyses trends in the electricity and gas wholesale markets and includes discussion of prices, demand, generation, contracts, market outlook and new entry and exit.

On 24 April 2023, AEMO released its final report for its NEM Reliability Forecasting Guidelines and Methodology Consultation. AEMO has made changes to a number of reliability forecasting guidelines and methodologies to align with amended NER requirements and improve AEMO's reliability forecasting methodologies. 

On 27 April 2023, the AEMC released its draft recommendations to improve compliance with Consumer Energy Resources (CER) technical standards. The recommendations address key challenges with the way that CER (including solar PV, batteries and electric vehicles) interact with the energy system to improve system security and reduce cases of 'tripping'. 

The draft recommendations include actions for:

• manufacturers and suppliers of CER devices, such as updates to devices to remedy non-compliances and removal of historical standards from new devices;
• installers, such as making new CER technical standards mandatory for approved sellers and funded technical standards training for CER installers;
• market participants, including an accelerated rollout of smart meter devices with improved access to data; and
• jurisdictions, to consider establishing programs to subsidise the re-configuration of non-compliant devices.

The AEMC is seeking submissions in response to the draft recommendations until 25 May 2023.

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Authors: Andre Dauwalder, Counsel; Alexandria Brown, Graduate and Murray Rissik, Paralegal.