Legal development

Australian electricity and gas markets - June 2022 update

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    What you need to do:

    Stakeholders should note the new rules and reports published below, and note the deadlines for making submissions.

    There have been a number of very significant developments and we have published detailed articles on them – the links to our articles are included in the information below.

    National Electricity Rules

    On 1 June 2022, the Australian Energy Market Commission (AEMC) released a draft report as part of Stage 2 of the Transmission Planning and Investment Review (TPIR).  As part of the TPIR, the AEMC is considering whether the regulatory framework is flexible enough to enable the timely and efficient delivery of major transmission projects needed to support the transformation of the energy market towards net zero.  The report contains draft recommendations in relation to managing uncertainty in the near-term to support the timely and efficient delivery of major transmission projects.  There have been a number of proposed draft rule changes during TPIR Stage 2 in relation to these recommendations. Stakeholder submissions on the consultation paper are due by 14 July 2022.

    On 9 June 2022, the Australian Energy Market Operator (AEMO) and AEMC released a joint paper capturing the progress on essential system services (ESS) reform initiatives as well as detailing the next priority in essential system services, inertia, as part of the Energy Security Board's (ESB) post-2025 reform package.  The joint paper describes the status of initiatives underway, associated linkages and longer-term considerations of an inertia spot market, including the Australian Energy Council's (AEC) Efficient provision of Inertia rule change request.  Responses to questions posed in the paper in relation to the rule change request are due by 21 July 2022.

    AEMC extended the date it will deliver its draft determination for the Operational security mechanism rule change request to 25 August 2022.  As part of the rule change request, the AEMC is considering options for the scheduling and provision of ESS to ensure power system security.

    National Energy Retail Rules

    On 16 June 2022, the AEMC released a draft rule and determination in response to the Protecting customers affected by family violence rule change request.  Recognising the role retailers have to play in providing targeted, practical assistance and support to customers affected by family violence, the AEMC proposes measures, including requiring retailers to:

    • protect an affected customer's personal information and prioritise their safety when communicating;
    • consider the specific financial challenges that affected customers face; and
    • develop and implement a family violence policy which addresses the new family violence obligations in the NERR and is consistent with leading practice. 

    Stakeholder submissions on the draft rule and determination rule are due by 4 August 2022

    National Gas Rules

    No gas rule change requests were received in June.  No AEMC determinations relevant to the NGR were published.

    AEMC extended the date it will deliver its final determination for the DWGM distribution connected facilities rule change request to 8 September 2022.  As part of the rule change request, the AEMC is considering the proposal to allow gas production and storage facilities to connect to distribution networks on the Victorian Declared Wholesale Gas Market (DWGM).

    Market updates

    Market Suspension and Administered Price Period 

    AEMO suspended the spot market in all regions of the National Electricity Market (NEM) on 15 June 2022 on the basis that it had become impossible to continue operating while ensuring a secure and reliable supply of electricity for consumers in the NEM. The suspension was lifted on 24 June 2022.  

    Prior to suspending the spot market in all regions of the National Electricity Market (NEM) on 15 June, AEMO had introduced administered price caps in Queensland, New South Wales, Victoria and South Australia due to wholesale electricity prices reaching the cumulative high price threshold of $1,359,100, triggering a $300 megawatt hour price cap.

    ESB – Capacity Mechanism

    On 20 June 2022, the ESB released it Capacity Mechanism High-level Design Paper outlining the proposed capacity mechanism for the NEM, including its proposed direction on fundamental design decisions and the key considerations informing these positions to be submitted to federal and State ministers.  The proposed capacity mechanism will pay providers of capacity to keep capacity available during certain periods in order to reduce investor reliance on unreliable wholesale market outcomes and to reduce the risk of high electricity prices caused by a disorderly energy transition.  Stakeholder feedback is due by 25 July 2022.  See our recent energy alert, for more information about the proposed capacity mechanism. 

    AEMO – 2022 ISP and ESOO

    On 30 June 2022, AEMO published the final 2022 Integrated System Plan, outlining its 30-year roadmap of investments for the NEM. The material changes from the draft ISP can be found on page 18.

    On 17 June 2022, AEMO published its annual reliability outlook, the 2022 Wholesale Electricity Market Electricity Statement of Opportunities. The Wholesale Electricity Market (WEM) Electricity Statement of Opportunities (ESOO) forecasts that sufficient electricity supply is available to meet projected demand until at least 2025 in Western Australia's power system. 

    Reliability Panel

    On 9 June 2022, the Reliability Panel (the Panel) released its 2022 Reliability Standard and Settings Review draft report. The draft report sets out a number of Panel positions and observations for the reliability standard and settings needed between 1 July 2025 to 30 June 2028.  The Panel has not made recommendations for the form or level of the reliability standard at this stage but acknowledges that there may be a case to change the way the reliability standard is applied due to the transition of power system to higher levels of variable renewable energy generation and therefore changing risk profile.  The Panel seeks stakeholder feedback on the following candidate Market Price Cap (MPC) and Cumulative Price Threshold (CPT) ranges: 

    • MPC of $21,000/MWh to $29,000/MWh; and 
    • CPT of $1,359,100 (corresponding to 7.5 hours at the existing MPC) and $4,176,000 (corresponding to 12 hours at a maximum MPC of $29,000/MWh). 

    The Panel seeks to retain the existing form and level of Administered Price Cap (APC) and market Floor Price (MFP) for the remaining review period.  Stakeholder submissions on the draft report are due by 7 July 2022, before the Panel publishes its final report on 1 September 2022. 

    On 30 June 2022, the Reliability Panel released a draft report in relation to the 2022 Review of the guidelines for identifying reviewable operating incidents market review.  AEMO uses the guidelines to determine when a power system security incident is considered a "reviewable operating incident", which it is required to investigate and report on.  The review follows an AEMO request proposing five changes to the guidelines to improve efficiency, reduce the costs imposed on participants and ensure AEMO only undertakes necessary reviews. Stakeholder submissions on the draft report are due by 28 July 2022


    On 2 June 2022, the Australian Energy Regulator (AER) published draft amendments to its transmission pricing methodology guidelines to include how to price system strength services in the NEM.  Stakeholder submissions on the draft amendments are due by 15 July 2022.

    On 16 June 2022, AER released the draft Rate of Return Instrument and explanatory statement which sets out the approach by which AER will estimate the rate of return, comprising the return on debt and equity, and the value of imputation credits.  AER is holding an online stakeholder forum on 27 July 2022 at 2:00pm (AEST), interested persons can register here. Stakeholder submissions on the draft instrument are due by 2 September 2022.

    On 30 June 2022, AER released its DER Integration Expenditure guidance note which outlines its expectations of what evidence should be included in distribution network proposals for integrating higher levels of customer distributed energy resources (DER).  The AER also released Customer Export Curtailment Value Methodology and accompanying explanatory statement that determines the value of reduction in export curtailment. 

    Click here to see our latest Energy Alerts, as part of our Energy Alert Series.

    Authors: Paul Newman, Partner; Andre Dauwalder, Senior Associate; Harriet Curran, Lawyer and Rachel Sweeney, Graduate.

    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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