A consultation paper published today by the Australian Energy Market Commission (AEMC) is seeking feedback on amending the level of price caps to ensure the reliability of the national energy system by mitigating ongoing threats to its operation. 

High global commodity prices, outages, and increased demand for coal and gas during an east coast cold snap led to wholesale energy prices reaching the cumulative price threshold in June 2022, triggering a $300 megawatt-hour cap under the National Electricity Rules (Rules).  

In its rule change request, Alinta considers that the current energy challenge has impeded the effective operation of the electricity market which in turn has threatened the security and reliability of the system. As a result, Alinta contends that the underlying settings must be changed to ensure normal market operation and to balance trade-offs to meet the long-term interests of consumers. 

AEMC Chair Anna Collyer said the AEMC is committed to examining any underlying factors that may have contributed to the destabilisation of the market to avoid further risk of administered price periods, market suspension, and/or blackouts. 
‘For us, it’s about getting the right settings to ensure the security of the grid for the benefit of Australian energy consumers. This is about keeping the lights on,' Ms Collyer said. 

‘In assessing this rule change request, we will consider if improvements should be made to the administered price cap to better incentivise dispatchable generators during times of scarcity, giving consumers confidence the market is stable.

‘We will also examine whether customers will be better off under an amended APC level than if the current cap remained in place and they face separate compensation payments’.

A proposal was submitted by Alinta Energy to lift the level of the APC from $300/MWh to $600/MWh in every NEM region, with a sunset period of 12 months or a suitable period as determined by the AEMC. 

Alinta Energy has suggested the rule change process be expedited as an urgent rule under section 96(1) of the National Electricity Law (NEL). A decision to expedite the process does not indicate a Commission position on the substance of the rule change. 

The focus of the AEMC is on running a thorough and transparent process in the long-term interests of energy consumers in accordance with the National Electricity Objective.  

For media inquiries: media@aemc.gov.au  
Contact: Georgina Kentwell 0411 043 964 or Jessica Rich 0459 918 964 

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