Australian electricity and gas markets November update
05 December 2022
05 December 2022
Stakeholders should note the new rules and reports published below, and note the deadlines for making submissions.
On 17 November 2022, the Australian Energy Market Commission (AEMC) released its final determination and final rule regarding the Amending the administered price cap rule change to the National Electricity Rules (NER). The AEMC has decided to raise the Administered Price Cap (APC) to a level that will reduce the risk of blackouts, secure the energy supply and keep the system more stable during the transition towards renewable energy. The APC level has been raised following concerns that it was not high enough to manage the recent extreme market volatility, which led to the suspension of the National Electricity Market (NEM) in June 2022. The final rule increases the APC from $300/MWh to $600/MWh. The rule will be implemented on 1 December 2022 and will remain effective until 30 June 2025. No change to the cumulative price threshold (CPT) is made as a part of this final rule.
On 24 November 2022, the AEMC published its final rules report in relation to the Review into extending the regulatory frameworks to hydrogen and renewable gases. The report recommends changes to the National Gas Rules (NGR) and National Energy Retail Rules (NERR) to extend the regulatory frameworks to include hydrogen blends and renewable gases. The recommended final rules:
The AEMC has provided its recommended rules to the Energy Ministers for approval in accordance with the terms of reference. Once the required legislative changes are made, the rules will then be made by the South Australian Minister.
On 3 November 2022, the AEMC published a draft report as a part of the Review of the regulatory framework for metering services. The report sets out 20 recommendations and options to accelerate the deployment of smart meters in the NEM. The AEMC has highlighted several key recommendations, including:
Submissions on the draft report are being sought until 2 February 2023. Interested stakeholders can make submissions here.
On 2 November 2022, the Offshore Electricity Infrastructure Regulations 2022 (OEI Regulations) and Offshore Electricity Infrastructure (Regulatory Levies) Regulations 2022 (OEI Levies Regulations) commenced. The OEI Regulations are crucial to operationalising Australia's offshore wind regulatory regime and outline the detailed arrangements of the OEI framework under the Offshore Electricity Infrastructure Act 2021 (OEI Act) and Offshore Electricity Infrastructure (Regulatory Levies) Act 2021 (OEI Levies Act). We have reported on the OEI Acts in previous energy alerts (see here and here). Please see our latest energy alert for more specific information on What you need to know when applying for an offshore electricity infrastructure licence in Australia.
On 3 November 2022:
On 4 November 2022, the AER released a draft guideline and explanatory statement following a review of the Ring fencing guideline (electricity transmission). The key proposals of the draft guideline are to:
Submissions on the draft guideline are invited until 16 December 2022. For more information see here.
On 16 November 2022, the AER released the Wholesale Markets Quarterly – Q3 2022 Report. This report examines how the wholesale gas and electricity markets responded to what the AER described as "the most tumultuous months in the history of Australia's energy markets".
On 18 November 2022, the AER released a draft report on Incentivising and measuring export service performance. The draft report follows the AEMC's final determination and rule change regarding Access, pricing and incentive arrangements for distributed energy resources. The rule change amended the NER and NERR and tasked the AER with delivering a package of reform workstreams to strengthen customer protections and regulatory oversight over Distribution Network Service Provider's (DNSPs) provision of export services. The AER has invited stakeholder submissions on the draft report until 30 January 2023. For more information see here.
On 30 November 2022, the AER published the Annual Retail Markets Report 2021-22 and Retail Energy Market Performance Update for Quarter 4 2021-22 which provides the retail energy market performance data that accompanies the report. The report covers the states and territories in which the Retail Law applies and reports on the market share, movements and performance overview of the retail energy market and energy businesses, as well as reporting on pricing and energy affordability and consumers' payment difficulties for the 2021-22 report period.
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Authors: Paul Newman, Partner; Andre Dauwalder, Senior Associate; Alexia Cuss, Graduate and Murray Rissik.