Australian electricity and gas markets – December 2024 and January 2025 Update 

In our December and January 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

Final Rules

On 12 December 2024, the Australian Energy Market Commission (AEMC) released a final rule and final determination for its Cyber security roles and responsibilities rule change. The final rule has immediate effect and allows the Australian Energy Market Operator (AEMO) to:

• plan and coordinate cyber security incident responses across the National Electricity Market (NEM);
• continue to support NEM participants with cyber security preparedness;
• advise government and industry stakeholders on cyber security risks; and
• distribute cyber security information (e.g. vulnerabilities, patches, and post-incident reports) to NEM participants.

On 12 December 2024, AEMC released a more preferable final rule and final determination for its Shortening the settlement cycle rule change. The final rule:

• shortens the NEM settlement cycle from 20 business days to 9 business days after the end of a billing period;
• obliges AEMO to issue:
  • preliminary statements within 3 business days after the end of a billing period;
  • final statements within 7 business days after the end of a billing period;
  • a routine revised statement at 20 business days after the end of a billing period; and
• defines the payment date to be the later of 9 business days after the end of a billing period or two business days after receiving a final statement.
  The final rule has effect from 9 August 2026.

On 16 January 2025 the Orderly Exit Management Framework incorporated in the new chapter 4B of the NER commenced. It includes the following including:

• Prescribed information requirements;
• System Needs Assessment performed by the AEMO and the trigger for the Jurisdiction Minister to issue a shortfall notice;
• Search for alternative solutions;
• Consumer Benefit Assessment and Emissions Impact Report;
• Preliminary cost estimate of a MOD that is provided to the Jurisdiction Minister;
• Technical and financial due diligence reporting;
• Voluntary agreement negotiations;
• The content of a MOD, performance obligations, operating mode, exemptions and termination of a MOD;
• Details of a financial payment instrument and compensation arrangements to execute the commercial component of the OEMF;
• Function, payments to and from, and administration of the OEM fund; and
• Cost recovery arrangements specific to the OEMF.

This rule amendment also seeks to recover costs from energy users through the existing DNSP jurisdictional scheme mechanism.

On 23 January 2025, the AEMC released a final rule for a time-limited jurisdictional derogation in South Australia. It will provide the AEMO with additional options for interim reliability reserves (IRR) to manage reliability risks through the summer. AEMO is to consider contracting Snuggery and Port Lincoln power stations, currently owned by ENGIE, as emergency out of market reserves.

This exemption from usual market restrictions will end on 31 March 2025.

Draft Rules

On 5 December 2024, the AEMC released a more preferable draft rule and draft determination for its Improving the NEM access standards – Package 1 rule change. The draft rule:

• amends the NEM access standards to apply by plant type rather than registered participant type; and
• provides specific access standards for:
  • generators;
  • integrated resource systems;
  • synchronous condensers; and
  • high voltage direct current systems.

This rule change includes significant changes in the access standards that apply to variable renewable energy productions units and to bi-directional production units. Submissions for the draft rule change closed on 30 January 2025.

On 12 December 2024, the AEMC released a more preferable draft rule and draft determination for its Inter-regional settlements residue arrangements for transmission loops rule change. The draft rule:

• applies to transmission loops that operate across multiple regions;
• allocates negative inter-regional settlement residue between transmission loop regions in proportion to regional demand; and
• was proposed in response to an upcoming transmission loop between New South Wales, South Australia, and Victoria.

Submissions for the draft rule change closed on 30 January 2025.

Consultation Papers

The AEMC sought feedback on its review of the System Restart Standard issues paper by 30 January 2025.

The AEMC is seeking feedback on its:

• National Electricity Amendment (Efficient provision of inertia) Rule 2025 directions paper by 5 February 2025.
• National Electricity Amendment (Amendment to frequency performance payment cost recovery) Rule 2025 consultation paper by 13 February 2025.
• National Electricity Amendment (Removing the requirement to publish transmission information guidelines) Rule 2025 consultation paper by 27 February 2025.
• National Electricity Amendment (Real-time data for consumers) Rule 22025 directions paper by 20 February 2025.

The Clean Energy Regulator is seeking feedback on the draft Audit Thresholds Instrument 2025 for the Australian Carbon Credit Unit Scheme by 5 February 2025.

National Energy Retail Rules

No energy retail rule requests were initiated in December 2024 or January 2025. No AEMC determinations relevant to the National Energy Retail Rules were published.

National Gas Rules

No gas rule change requests were initiated in December 2024 or January 2025. No AEMC determinations relevant to the National Gas Rules were published.

Other Updates

The AEMC published a final report for the Review into electricity compensation frameworks.

In December 2024, AEMO published the following reports:

• Draft 2025 Inputs, Assumptions and Scenarios Report;
• 2024 System Strength Report; and
• 2024 Transition Plan fo System Security.

The Australian Energy Regulator (AER) sought feedback on its amended Ring-fencing guideline (electricity transmission) by 28 January 2025.

The AER also published its:

• Retail performance data for Q1 2024-25;
• Insights into Australia's growing two-way energy system report;
• Values of Customer Reliability 2024;
• updated Compliance Procedures and Guidelines (Procedures and Guidelines);
• Rate of Return Annual Update 2024;
• Annual retail markets report 2023-24; and
• AEMO's Cost Benefit Analysis guidelines compliance report.

Stop Press - $9 million civil penalty for breach of GPS

On 4 February, Justice Roger Derrington, handed down the decision in Australian Energy Regulator v Callide Power Trading Pty Ltd. 

The proceedings related to the alleged failure of Callide Power Trading to ensure that the Callide C4 generating unit:

• met or exceeded certain provisions of its generator performance standards on 21 May 2021 (when there was a catastrophic failure and destruction of the Callide C4 generating unit); and
• was planned, designed and operated to comply with certain provisions of its generator performance standards.

Callide Power Trading admitted to two of the breaches of the NER alleged by the AER and was ordered to pay a $ 9 million civil penalty (which was the agreed penalty in joint submissions presented to the Court).

Key learnings include:

• consistent with the AER's enforcement priorities, there is a clear focus on non-compliance with performance standards that contribute to major market events or AEMO’s ability to safely and securely operate the network; and
• the AER will take enforcement action against the person appointed as the intermediary (and who becomes the Registered Participant) for plant under the NER, rather than the parties who have appointed the intermediary (e.g. the owners of that plant). Significantly, the AER did not seek to rely on the deeming provision in clause 2.9.3(d) of the NER to take enforcement action against other parties – this means entities who agree to be appointed as an intermediary under the NER need to be diligent in ensuring that there is ongoing NER compliance by other entities involved in the ownership or operation of plant, and should require robust contractual rights and protections from those entities.

Authors: Dan Brown, Partner; Dale Gill, Partner, Paul Newman, Consultant, Benita Bhikha, Graduate; Ethan Low, Paralegal and Isabella Skene, Paralegal.