Australian electricity and gas markets – May 2025 Update

In our May 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 8 May 2025, the Australian Energy Market Commission (AEMC) made a more preferable final rule to help make the electricity grid more resilient to extreme weather events. With climate change expected to further exacerbate extreme weather events, distribution network resilience will now be expressly recognised in the National Electricity Rules (NER), establishing a formal framework that includes:

• new resilience expenditure factors the Distribution Network Service Providers (DNSPs) and the Australian Energy Regulator (AER) must consider in developing and assessing expenditure proposals;
• a requirement for the AER to develop, publish and maintain formal Network Resilience Guidelines; and
• new annual planning and reporting requirements to improve the transparency and accountability of DNSP performance, and outcomes for consumers, in severe weather events.

On 22 May 2025, the AEMC finalised a comprehensive overhaul of the technical requirements for connecting to the national electricity grid. The Commission published its final determination on "Package 1" of improvements to the National Electricity Market (NEM) access standards, which focuses on making it faster and cheaper for renewable energy generators to connect to the grid.

The AEMC stated that finalised Package 1 reforms will make the grid connection process more efficient by:

• adding more prescription and clarity to technical requirements, reducing costly negotiations;
• better accommodating inverter-based resources like solar, wind and batteries; and
• broadening application to synchronous condensers and high voltage direct current (HVDC) links needed for system stability.

With Package 1 now finalised and Package 2 open for stakeholder input (see below), the AEMC is progressing a comprehensive approach to connection standards. Both packages stem from the AEMO's comprehensive review of technical requirements for connection. The Commission invites stakeholder feedback on Package 2 by 19 June 2025.

On 29 May 2025, the AEMC completed a minor rule change to make minor corrections and non-material changes to the NER, the National Gas Rules (NGR) and the National Energy Retail Rules (NERR) to improve their quality. As with previous AEMC initiated rules, these minor corrections and non-material changes make the rules clearer for stakeholders.

The changes to the NERR include removing the provision in the model terms and conditions for standard retail contracts that allowed customers to opt out from a meter replacement. This is to ensure standard retail contracts are consistent with the NERR as amended by the Accelerating smart meter deployment rule.

Consultation Papers

The AEMC are requesting consultation on the following papers:

• Improving the NEM access standards – Package 2. Submissions close 19 June 2025.
• Clarifying registration for non-generating units providing system security services rule change request . Submissions close 3 July 2025.

National Energy Retail Rules

Final Decisions

On 26 May 2025, the AER released its final determination for the Default Market Offer (DMO) for electricity prices in 2025–26.

The DMO is a safety-net price for household and small business customers on standing offer plans in New South Wales (NSW), South East Queensland (SEQ) and South Australia (SA). It also acts as a reference price for all other market offers in each region.

National Gas Rules

Final Decisions

On 14 May 2025, the AER released the final decision on Jemena Gas Networks' (JGN) gas access arrangement for the regulatory period 1 July 2025 to 30 June 2030. The final decision includes a reduced capital expenditure forecast over the 2025–30 period. The AER has substituted an alternative estimate of $717.4 million ($2024–25), which is $120.7 million (14%) lower than JGN’s revised proposal. As part of minimising JGN’s capital expenditure, the AER has also not accepted JGN’s revised proposal of recovering $78.9 million in revenue to fund renewable gas connections from consumers.

Other Updates

Australian Energy Market Operator

On the 20 May, the Australian Energy Market Operator (AEMO) published that it has competed its winter readiness assessments and preparation for the country's major electricity and gas markets.

AEMO’s winter readiness and preparation includes assessment of forecasts for weather, electricity and gas demand, along with expected generation and network availability across the NEM, the East Coast Gas System and the Wholesale Electricity Market (WEM) in Western Australia.

Coal and gas-powered generation availability is expected to be higher on average in the NEM, supported by Queensland’s Callide C4 unit returning to service, and planned network maintenance is in line with previous winters.

Coal stockpile inventory in the NEM is at normal levels, and gas demand is forecast to be lower than average across a range of weather conditions – consistent with the past two winters. Pre-winter maintenance at gas supply facilities in south east Australia have been completed and gas storages are also full.

National Electricity Market wholesale market settings review

The review panel, comprising Associate Professor Tim Nelson (Chair), Ms Paula Conboy, Ms Ava Hancock, and Mr Phil Hirschhorn, have completed a series of public forums as part of the review process, following the initial consultation phase. The panel is expected to publish a draft recommendations paper in July or August 2025.

A central focus of the forums was the long-term investment pathway, with the presentation outlining the potential development of a market-making contractual framework to support and underwrite future investment. The presentation delivered at these public forums has now been published and is available here.

Authors: Dan Brown, Partner; Dale Gill, Partner; Paul Newman, Consultant; Savannah Tindiglia, Graduate and Isabella Skene, Paralegal.