Australian electricity and gas markets – February 2024 Update 

In our February update, we take a look at the latest rule changes and market updates affecting participants in the Australian electricity and gas markets.

National Electricity Rules

On 1 February 2024, the Australian Energy Market Commission (AEMC) finalised its Harmonising the national energy rules with the updated national energy objectives (electricity) rule change, publishing a final determination and final electricity rule. The final rule:

• includes changes in Australia’s greenhouse gas emissions as a class of market benefit for the Integrated System Plan (ISP), RIT-T and RIT-D;
• updates the ISP public policy clause and other wording in the National Electricity Rules (NER); 
• allows network operators to propose expenditure for activities that contribute to achieving emissions reduction targets; and 
• enables the Australian Energy Regulator (AER) to update guidelines and instruments efficiently, streamlining consultation and reducing administrative burden on stakeholders.

The final rules commenced 1 February 2024.

On 15 February 2024, the AEMC released new modelling around the integration of price-responsive resources into the National Electricity Market (NEM). The modelling projects an estimated $1.5 – 1.9 billion cost saving between 2025 and 2050 attributable to this integration.

The AEMC released this modelling in support of its proposed Integrating price-responsive resources into the NEM rule change. 

Publication of the draft rule was extended to 25 July 2024 as the rule change will cover a number of interrelated and complex issues.

On 22 February 2024, the AEMC released:

• its draft 'ring-fencing' rule for transmission connections. The draft rule expands the powers of the AER to: 
  • develop ring-fencing obligations for transmission network service providers (TNSPs) in respect of negotiated transmission services; and
  • decide whether or not to specify obligations for the ring-fencing of negotiated transmission services from non-regulated transmission services (in order to address any risk of discriminatory conduct in the provision of connection services).

  Written submissions must be lodged with the AEMC by 4 April 2024 to respond to this draft rule.

• a consultation paper in relation to a proposed rule change to shorten the settlement cycle. The proposal seeks to shorten the settlement cycle from 20 to 10 business days following the end of a billing period. Written submissions must be lodged with the AEMC by 4 April 2024 to respond to this proposed rule change; and
• updates to the market price cap and cumulative price threshold as adjusted for the 2024-25 financial year. Compared to the period from 1 July 2023 to 30 June 2024:
  • the market price cap will increase from $16,660 / MWh to $17,500 / MWh; and
  • the cumulative price threshold will increase from $1,490,200 / MWh to $1,573,700 / MWh.

On 29 February 2024, the AEMC:

• finalised its Calculation of system strength quantity rule change, publishing a final determination and final rule. The final rule changes the way the system strength quantity component of the system strength charge is calculated, to give market participants and investors greater clarity and confidence in the framework.
• published a draft determination to assist with Unlocking CER benefits through flexible trading. This coincides with the trends identified in AEMO's ISP which demonstrate that CER, and resources such as neighbourhood batteries, will play a vital role in Australia's power system. 

National Energy Retail Rules

On 1 February 2024, the AEMC finalised its Harmonising the national energy rules with the updated national energy objectives (retail) rule change, publishing a final determination and final retail rule. The final rule enables the AER to update guidelines and instruments efficiently, streamlining consultation and reducing administrative burden on stakeholders.

The final rules commenced 1 February 2024.

National Gas Rules

On 1 February 2024, the AEMC finalised its Harmonising the national energy rules with the updated national energy objectives (gas) rule change, publishing a final determination and final gas rule. The final rule: 

• updates the wording of the National Gas Rules (NGR) to align with the National Gas Objective (NGO); 
• allows network and pipeline operators to include expenditure on revenue and access arrangement proposals that contribute to emissions reduction targets; and
• enables the AER to update guidelines and instruments efficiently, streamlining consultation and reducing administrative burden on stakeholders.

The final rules commenced 1 February 2024.

Written submissions must be lodged with the AER by 12 March 2024 to respond to the proposed update.

Other Updates

On 7 February 2024, the Energy Security Board (ESB) published its final report on Consumer Energy Resources (CER) and the transformation of the National Electricity Market (NEM). The report summarises the key insights and lessons learnt across the CER reform journey to date and outlines a forward pathway for CER integration through a series of priority areas. For more information see here. 

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Authors: Andrew Dauwalder, Counsel; Samirah Delor, Graduate; Murray Rissik, Paralegal