Rule Change Process
The Rule Change Process and how to lodge a Rule Change Proposal
Set out below is a brief introduction to the Rule change process which is set out in Division 3 of Part 7 of the National Electricity Law – Procedure for the making of a Rule by the AEMC. This introduction includes the amendments to the National Electricity Law and National Electricity (South Australia) Regulations that commenced operation on 1 January 2008.
Generally, there are four stages to the Rule change process:
- Stage 1 - Initiation and preliminary assessment of a Rule change proposal
- Stage 2 - Consultation on a proposed Rule change
- Stage 3 - Draft Rule determination and further consultation
- Stage 4 - Final determination and making of an amending Rule
A more detailed outline of the steps in the procedure for making changes to the National Electricity Rules (the Rules) is set out below. This process is set out in Part 7 of the National Electricity (South Australia) Act 1996 (referred to as the NEL). The National Electricity (South Australia) Regulations (the Regulations) sets out some additional requirements.
The Commission has published three documents to assist proponents in preparing a Rule change proposal and submissions. Copies of the guidelines can be found below:
Stage 1 - Initiation and preliminary assessment of a Rule change proposal
Who may put forward a Rule change proposal?
Any person may put forward a Rule change proposal, including:
- Registered Participants in the NEM - those registered with NEMMCO in accordance with the NEL;
- NEMMCO;
- the MCE;
- the Reliability Panel;
- the AEMC (but only in limited circumstances);
- Any other person - any stakeholder or interested person such as end use customers not registered with NEMMCO, or stakeholder groups.
How to put forward a Rule change proposal
A request for the making of a Rule must be made in writing to the AEMC. Guidance on preparing a Rule change request can be found in the AEMC’s Guidelines for Proponents Preparing a Rule Change Proposal.
What must a Rule change proposal contain? (section 92 NEL & Reg.cl.8)
A Rule change proposal must contain the following:
- the name and address of the person making the
request;
- a description of the Rule that the person proposes be made, including
in relation to proposals for a derogation, a statement as to whether the
derogation is a jurisdictional derogation or a participant derogation;
- a statement of the nature and scope of the issue(s) concerning the
existing Rules that is to be addressed by the proposed Rule and an
explanation of how the proposed Rule would address the issue or issues;
- an explanation of how the proposed Rule would or would be likely to
contribute to the achievement of the national electricity objective;
- an explanation of the expected benefits and costs of the proposed
change and the potential impacts of the change on those likely to be
affected; and
- in the case of a Rule change request from the AER, NEMMCO or the
Reliability Panel (electricity market regulatory bodies) that could be a
“fast tracked” Rule (under s.96A of the NEL), a summary of the
consultation conducted by the electricity market regulatory body,
including information about:
- the extent of the consultation;
- issues raised during the consultation; and
- the electricity market regulatory body’s response to those issues raised during consultation.
A Rule change proposal may be accompanied by a draft of the Rule to be made, but this is not essential.
Initial consideration by the Commission of a Rule change proposal (section 94 of the NEL)
The Commission is required to assess whether the Rule change proposal:
- contains the information prescribed by the regulations;
- is misconceived or lacking in substance;
- is for a Rule that is within the power of the AEMC to make (NB Section
34 and Schedule 1 of the NEL specify the subject matter for Rules);
- relates to the subject matter of a Rule made, or a request for the
making of a Rule not proceeded with, in the 12 months immediately before
the date that Rule or that request, was made; and
- relates to the subject matter of a Rule change proposal which the AEMC is taking action in accordance with the Rule making process (in Division 3 of Part 7 of the NEL).
If a Rule change proposal does not appear to satisfy these requirements, the Commission may make a decision not to proceed to the Rule making process and must:
- make a decision to that effect,
- inform the person who made the request;
- give reasons for the decision; and
- where the decision not to proceed with the Rule making process is related to the subject matter that the proposal relates to, publish the decision.
The Commission may decide to consolidate the processes for 2 or more Rule change proposals that it considers necessary or desirable (s.93 NEL). The Commission may also treat a later Rule change request as a submission in relation to the earliest Rule change request. This is designed to allow the Commission to streamline the Rule change process.
Stage 2 - Consultation on a proposed Rule change
Early consultation with related regulatory bodies
A Memorandum of Understanding between the AEMC, the AER and the ACCC, is the instrument by which the three bodies have agreed to consult early in the Rule making process where a proposed Rule may have direct implications for the AER (as energy regulator) or for the ACCC (as competition regulator).
The commencement of first round consultation (section 95 of the NEL)
The Commission must publish a notice that includes:
- notice of the request for the making of a Rule;
- a draft of the proposed Rule;
- an invitation for any person to make written submissions;
- a date by which submissions must be received; and
- the date specified must be not less than four weeks from the date the notice is published.
Other matters that may be included in the section 95 notice include notice of a public hearing if the Commission decides to hold a public hearing; notice of the Commission’s decision to consolidate two or more Rule change processes; or if the Commission considers a proposed Rule is non controversial or urgent, its decision to expedite the process under section 96 of the NEL.
What does "publish" mean in relation to the Rule change proposal? (section 87 of the NEL)
There are different requirements under the NEL for publishing in relation to different aspects of the Rule making process. Publish means:
- in relation notices at different stages of the Rule
making process, the requirement to publish in the South Australian
Government Gazette, on the AEMC's website and in a newspaper circulating
generally throughout Australia (which is currently The Australian);
- in relation to a proposed Rule referred to in section 95 and any other
required documents, the requirement to publish on the AEMC's website and
make available at the offices of the AEMC;
- in relation to a draft Rule determination or final Rule determination
the requirement to publish on the AEMC's website and make available at
the offices of the AEMC;
- in relation to any submissions or comments received in relation to the
Rule change process, the requirement to publish on the AEMC's website and
make available at the offices of the AEMC but this is subject to a claim
of confidentiality under section 108 of the NEL;
- in relation to a decision not to proceed with the Rule making process (under section 94), publish on the AEMC’s website and make available at the offices of the AEMC.
Right to make written submissions (section 97 of the NEL)
Any person is able to make a written submission to the AEMC in relation to a Rule change proposal during the specified period.
Public Hearings (section 98 of the NEL)
The AEMC may (but is not compelled) to hold a hearing in relation to a proposed Rule before the making of a draft Rule determination.
Stage 3 - Draft Rule determination and second round consultation (section 99 of the NEL)
Notice of Draft Rule Determination
Within ten weeks of the close of first round consultation (i.e. the period specified in the notice made under section 95 for the making of submissions), the AEMC must publish:
- a draft Rule determination in relation to a proposed Rule; and
- a notice of the draft Rule determination.
The draft determination must include the reasons of the Commission as to whether or not it should make the proposed Rule including:
- in the case where the proposed Rule is not a proposed more preferable Rule, the reasons of the Commission as to whether it is satisfied the proposed Rule will or is likely to contribute to the achievement of the national electricity objective;
- in the case of a proposed more preferable Rule, the reasons of the Commission as to whether it is satisfied the proposed more preferable Rule will or is likely to contribute to the achievement of the national electricity objective than the proposed Rule to which the more preferable Rule relates;
- the reasons of the Commission taking into account the form of regulation factors or the revenue and pricing principles, if required;
- the reasons of the Commission having regard to any relevant MCE statement of policy principles;
- the reasons of the AEMC having regard to any other matters the AEMC considers relevant;
- a draft of the Rule to be made (if the draft decision is to make a Rule);
- any other requirements set out in Regulations; and
- if the proposed Rule or proposed more preferable Rule (if any) is a proposed jurisdictional derogation, the reasons of the Commission having regard to the matters specified in s.89 of the NEL.
NB The draft Rule does not have to be the same as the proposed Rule.
The s.99 notice of the draft Rule determination must:
- an invitation for written submissions;
- a date by which submissions must be received;
- the date specified must be not less than six weeks from the date of the notice; and
- include a statement that any interested person may request a pre-final Rule determination hearing if they do so within one week of the notice.
Right to make written submissions (section 100 of the NEL)
Any person is able to make a written submission in relation to the draft Rule determination during the period specified in the notice under section 99.
A hearing may be held prior to making a final Rule determination (section 101 of the NEL)
Any person or body may request the AEMC in writing to hold a hearing in relation to a draft Rule determination.
The AEMC may decline to hold such a hearing, but must provide its reasons for doing so to the person making the request. The AEMC may decide not to hold a hearing if the person or body that requested the hearing does not make a submission in relation to the draft Rule determination or no other person or body requests a hearing.
Where the AEMC agrees to hold a hearing it must:
- appoint a date, time and place for the hearing and publish a notice; and
- set the date for the hearing no later than three weeks after notice is given under section 99.
Stage 4 - Final Rule determination and making of an amending Rule (section 102 NEL)
Within six weeks of the close of the period set out in the notice for the making of submissions (second round consultation), the AEMC must publish:
- a final Rule determination in relation to a proposed Rule; and
- notice of the final Rule determination.
The final determination must include the reasons of the Commission as to whether or not it should make a Rule including:
- in the case where the Rule is not a more preferable Rule, the reasons of the Commission as to whether it is satisfied the Rule will or is likely to contribute to the achievement of the national electricity objective;
- in the case of a more preferable Rule, the reasons of the Commission as to whether it is satisfied the more preferable Rule will or is likely to contribute to the achievement of the national electricity objective than the Rule to which the more preferable Rule relates;
- the reasons of the Commission taking into account the form of regulation factors or the revenue and pricing principles, if required;
- the reasons of the Commission having regard to any relevant MCE statement of policy principles;
- the reasons of the AEMC having regard to any other matters the AEMC considers relevant;
- any other requirements set out in Regulations; and
- if the Rule or the more preferable Rule (if any) is a jurisdictional derogation, the reasons of the Commission having regard to the matters specified in s.89 of the NEL.
If the AEMC decides to make a more preferable Rule, the AEMC may publish another draft Rule determination under section 102A of the NEL.
The formal making and publication of an amending Rule (section 103 - section 105)
The NEL requires the Commission to formally make the amending Rule as soon as practicable after the publication of the final Rule determination.
Notice of the making of the amending Rule is to be published in the South Australian Government Gazette.
The amending Rule commences operation on either:
- the day the Commission gives notice of the making of the amending Rule in the South Australian Government Gazette, or
- another day that is specified in the amending Rule and also by the Commission in its notice of the making of the amending Rule.
The AEMC must publish the amending Rule as made on its website and make a copy publicly available at its offices.
If a Rule or a notice published in the South Australian Government Gazette provides that the Rule shall commence on a particular day, the Rule commences at the beginning of that day.
The AEMC endeavours to consolidate the Rules within 3 working days of the making of the amending Rule.
Expedited procedure for non-controversial or urgent Rules (section 96)
The making of a non-controversial or urgent Rule may be expedited to a six week period (which excludes a public hearing, a draft Rule determination and a pre-determination hearing) from the date first round consultation commences (i.e. the date the notice made under section 95 is published) unless the Commission receives written objections (with reasons) not to do so within two weeks of that notice being published. Section 96 of the NEL sets out the criteria the Commission has to consider in determining whether to expedite the making of the Rule.
Fast track Rules from electricity market regulatory body or AEMC
review
(section 96A of the NEL)
In certain circumstances, the making of a draft Rule determination on a proposed Rule can be “fast tracked” such that it will be made within five weeks of the Commission deciding to commence the Rule change process on the proposed Rule. This fast track process involves excluding first round submissions and a public hearing under section 98. The Commission’s power to fast track the Rule change process is a possible option where the proposed Rule is a request that:
- has been made by an electricity market regulatory body (the AER, NEMMCO or the Reliability Panel) and the relevant body has consulted with the public on the nature and content of the request before making that request; or
- has been made by a person or the MCE on the basis of a recommendation for the making of a Rule contained in a MCE directed review or a conclusion for the making of a Rule contained in an AEMC Rule review.
Section 96A sets out the specific criteria the Commission has to consider in determining whether to fast track the making of a Rule.