Australian electricity and gas markets – May and June 2023 update
04 July 2023
What you need to do:
- Stakeholders should note the market updates below, and note any impacts on their compliance obligations.
National Electricity Rules
On 4 May 2023, the Australian Energy Market Commission (AEMC) released its final rule and final determination amending the Integrating Energy Storage Systems into the NEM rule (IESS rule).
The final 'more preferable' rule will reduce the costs and complexity for the Australian Energy Market Operator (AEMO) to implement the IESS rule, and improve certainty for market participants.
The final rule commenced operation on 11 May 2023, however the majority of amendments will take effect on 3 June 2024. For more information, see here.
On 11 May 2023, the AEMC released a consultation paper on the AEMC Reliability Panel's Rule Change Request to amend the Market Price Cap (MPC), Cumulative Price Threshold (CPT) and Administered Price Cap (APC) to the levels recommended in the 2022 Reliability Standard and Settings Review.
The Reliability Panel's recommendations stem from the 2022 Review, which found that a significant amount of new investment in generation, demand response and network capacity is required as thermal generators retire. The Rule Change Request aims to support this investment through MPC, CPT and APC market price settings.
For more information, see here.
National Energy Retail Rules
No retail rule change requests were initiated in May or June. No AEMC determinations relevant to the National Energy Retail Rules were published.
National Gas Rules
No gas rule change requests were initiated in May or June. No AEMC determinations relevant to the National Gas Rules were published.
Other Updates
Retailer of Last Resort Scheme
On 11 May 2023, the AEMC released a directions paper on its market review into arrangements for failed retailers' electricity and gas contracts. The paper outlines potential improvement to the current Retailer of Last Resort (RoLR) scheme, which facilitates the orderly transfer of customers to new retailers without disruption to their electricity or gas supply in the event of a retailer failure.
For more information, see here.
AER reviews RIT-T and RIT-D
On 18 May 2023, the Australian Energy Regulator (AER) published a consultation paper on its Cost Benefit Analysis guidelines and Regulatory Investment Test (RIT-T & RIT-D) application guideline review. The review covers amendments from the AEMC's material change in network infrastructure project costs rule determination, and the Stage 2 final report from the Transmission Planning and Investment review.
For more information, see here.
AEMO's General Power System Risk Review
On 23 May 2023, AEMO published a draft 2023 General Power System Risk Review (GPSRR) report as part of its 2023 GPSRR. From 2023, the GPSRR replaces the previous Power System Frequency Risk Review, expanding on its scope to review:
- a prioritised set of risks comprising contingency events and other conditions that could lead to cascading outages or major supply disruptions;
- current arrangements for managing identified priority risks and future management options;
- the management of existing protected events and any changes or revocation; and
- the performance of existing emergency frequency control schemes and the need for any modifications.
The final GPSRR report is scheduled for publication on 31 July 2023. For more information, see here.
AEMC publishes review of the Interim Reliability Measure
On 25 May 2023, the AEMC published its final report on its review of the Interim Reliability Measure (IRM). The IRM was introduced in 2020 as an interim measure to address reliability concerns. The AEMC has made a final recommendation to continue the IRM to the retailer reliability obligation to 30 June 2028. A rule change request will be submitted to give effect to this recommendation. For more information, see here.
AER releases final determination for 2023-24 Default Market Offer
On 25 May 2023, the AER published its final determination for the 2023-24 Default Market Offer (DMO). The DMO is an electricity price safety net that protects consumers from unjustifiably high prices and applies to households and small businesses in South Australia, New South Wales and south-east Queensland.
EnergyCo releases NSW Network Infrastructure Strategy
On 25 May 2023, the Energy Corporation of NSW (EnergyCo) released the Network Infrastructure Strategy for NSW. The Network Infrastructure Strategy is a 20-year strategy for the practical coordination of NSW network infrastructure:
- to connect new generation and storage in NSW’s five Renewable Energy Zones; and
- meet the Electricity Infrastructure Investment Act 2020 objectives.
The Network Infrastructure Strategy incorporates the NSW Electricity Infrastructure Roadmap, which aims to achieve at least 12 GW of renewable energy generation and 2 GW of long-duration storage by 2030.
The Strategy proposes Network Infrastructure Options with a total capacity of 14 GW to be delivered as soon as practicable over the next decade (by 2033). Further options for up to 24 GW of network infrastructure will be considered to bolster NSW's energy resilience, dependent on modelled scenarios.
Updated Connections Reform Roadmap published
On 26 May 2023, AEMO and the Clean Energy Council (CEC) published an updated Connections Reform Roadmap as part of the Connections Reform Initiative (CRI). The updated Roadmap details how the CRI will move through the planning to implementation phase. For our latest update on the Connections Reform Initiative, see our article Powering progress: Clean Energy Council's rule change sparks investor certainty in connection process.
AER releases 2023-24 compliance priorities
On 20 June 2023, the AER released its 2023-2024 Compliance and Enforcement Priorities. The Compliance and Enforcement Priorities help guide the AER's enforcement work and proactive compliance efforts, and are designed to signal areas where the AER considers that behavioural change in the market is required. The 2023-2024 priorities are:
- Improving outcomes for customers experiencing vulnerability, including by improving access to retailer hardship and payment plan protections;
- Making it easier for consumers to understand their plans by focusing on compliance with billing and pricing obligations;
- Supporting power system security and efficiency by focusing on generators' compliance with offers, dispatch instructions, bidding behaviour obligations and providing accurate and timely information to AEMO;
- Improving market participants' compliance with performance standards and standards for critical infrastructure; and
- Clarifying obligations and monitoring compliance with reporting requirements under the new Gas Market Transparency Measures.
Please click here to see our latest Energy Alerts, as part of our Energy Alert Series.
Authors: Andre Dauwalder, Counsel; Alexandria Brown, Graduate and James Heading, Seasonal Clerk.
