Australian electricity and gas markets - April 2022 update

What you need to do:

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

Rule Changes

National Electricity Rules

The AEMC published a draft rule and determination in response to the Improving Consultation Procedures in the Rules rule change request on 14 April. The draft rule proposes two new consultation processes in the NER for non-material changes, and minor and administrative changes, maintaining two rounds of consultation with updated timelines, flexibility for when complex issues arise and revised provisions for individual meetings and summaries for consultation events. Submissions on the draft determination and draft rules are due by 26 May 2022.

The AEMC published a consultation paper on the Recovering the cost of AEMO's Participant fees rule change request on 28 April. The rule change request proposes a new mechanism which would allow Transmission Network Service Providers to recover the cost of new AEMO participant fees more directly. The AEMC has decided to use an expedited rule change process, provided that it does not receive any valid requests not to use the expedited process by 12 May 2022. Stakeholders have been invited to make written submissions on the consultation paper by 26 May 2022. 

The AEMC extended the period of time for making the draft determination on the Enhancing information on generator availability in MT PASA rule change request to 26 May 2022 to allow for further consultation. The rule change request submitted by AEMO proposed to amend the NER to collect and publish more detailed information about scheduled generator availability in the medium term projected assessment of system adequacy (MT PASA).

The AEMC extended the period of time for making the draft determination on the Material change in network infrastructure project cost rule change request to 7 July 2022. The rule change request proposes that, unless an exemption is granted by the AER, a proponent must reapply the regulatory investment test (RIT) if, following completion of the RIT, the estimated cost of a transmission or distribution project materially increases.

National Energy Retail Rules

No new retail rule change requests were received in April. No AEMC determinations relevant to the NERR were published.

National Gas Rules

The AEMC published a draft rule and draft determination in response to the Improving Consultation Procedures in the Rules (Gas) rule change request  on 14 April. The draft rule removes the Extended consultative procedure from the NGR. Instead parties will be directed to consult according to the Standard consultative procedure, which provides a flexible two-round process. Written requests for a pre-determination hearing in relation to the draft rule and determination are due by 21 April 2022 and stakeholder submissions are due by 26 May 2022.

No new gas rule change requests were received in April.

Reviews

The AEMC recommenced its review of the regulatory framework for metering services on 14 April. The AEMC published its Direction paper for the review on 16 September 2021. The AEMC will continue working with stakeholders to develop a package of measures intended to accelerate the development of smart meters in the NEM. 

The AER recommenced its review of the transmission ring-fencing guideline on 14 April. As part of this review, the AER identified that when Chapter 6A of the NER (Economic Regulation of Transmission Services) was introduced, transition provisions for the transmission ring-fencing guidelines were omitted meaning that the guideline likely does not currently have legal force. AER proposes to reissue the guideline (interim guidelines) to link the guideline to the Chapter 6A provisions. Submissions on the interim draft guideline and explanatory statement are due by 31 May 2022. The AER will continue to conduct a full review of the guideline to address broader issues relating to the ring-fencing arrangements for TNSPs. 

The AER initiated a review of the retailer authorisation and exemption frameworks  on 22 April. The AER is reviewing the frameworks as set out in the National Energy Customer Framework to assess whether the current energy consumer protection framework remains fit-for-purpose in a transitioning energy market.

The AEMC Reliability Panel commenced a review of the Frequency Operating Standard (FOS) that applies to the national electricity market on 28 April. The review will examine the appropriateness of the FOS in light of the energy transformation as conventional synchronous generation is being progressively replaced by inverter-based technologies such as wind, solar and batteries. The Panel has invited comments and submissions from stakeholders in response to its issues paper by 9 June 2022.

Reports

The Clean Energy Council released its 2022 Clean Energy Australia Report on 1 April. The report provides a detailed overview of the Australian clean energy sector including key figures and statistics on the NEM, WEM and other regional grids across the country.

AEMO released an update to its 2021 Electricity Statement of Opportunities (ESSO) report on 14 April. The update provides an updated reliability forecast and information in light of Origin Energy's announcement regarding the potential early retirement of the Eraring Power Station and AGL's announcement regarding the Bayswater Power Station, as well as information on proposed generating units and network developments.

The Reliability Panel released its 2021 Annual Market Performance Review final report on 28 April which reports on reliability, security and safety of the power system. The Panel reports high levels of reliability, security and safety during the 2020-21 period and provides commentary on challenges, in particular, the effect of the transition away from coal and towards renewable energy sources firmed by a range of storage and gas technologies on reliability and security. 

Other updates

AEMO released an updated Guide to Generator Exemptions and Classification of Generating Units  (version 5.2) which became effective on 21 April.

The CER released its new fit and proper person guidelines  on 7 April for Carbon Service Providers who are Project Proponents in the Emissions Reduction Fund.

The AER released its proposed Customer export curtailment value methodology on 8 April to assist network planning for the integration of distributed electricity resources, such as rooftop solar, batteries and electric vehicles. Stakeholder submissions are due by 6 May 2022.

The AER released a guidance note on network resilience on 13 April to assist Network Service Providers, consumer groups and advocates to understand how resilience-related funding would be treated under the NER.

The AER published an Explanatory Statement on transmission charges for energy storage systems on 29 April. The statement is intended to provide greater clarity on transmission charging arrangements for energy storage and transmission network customers.

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Authors: Paul Newman, Partner; Andre Dauwalder, Senior Associate; Harriet Curran, Lawyer