The Australian Energy Market Commission has released new guidance to help ensure the consistency and quality of national energy rules needed as the market undergoes a massive transformation.

The rule drafting philosophy released today explains the AEMC’s approach to drafting the energy rules.

This comes as a swathe of changes to the rules are expected over the next years to roll out energy market reforms to secure the power system, assist the move to a two-sided market, improve access to the grid and integrate energy storage systems and distributed energy resources.

Also, the Finkel review into the national electricity market noted that there may be potential to streamline the National Electricity Rules.

The philosophy, available on the AEMC’s website, outlines the factors we will consider in drafting clear, consistent and appropriate rules. 

Significantly, the document includes guidance on an appropriate balance of prescriptive and principles-based drafting. A principles-based approach is appropriate unless more prescription is needed. This is a case-by-case decision because while prescriptive drafting can provide important certainty, an overly prescriptive approach can be a handbrake on innovation and add to costs. 

The drafting philosophy outlines three key principles for clear, effective and consistent rules and draws from best-practice guides to making regulation. 

The guidance includes useful material for lawyers engaged by stakeholders who are drafting proposed rules for a rule change request. Anyone, including consumers, governments and industry participants, can request a change to the energy rules – which makes the AEMC unique. 

As well as providing advice to energy ministers, the AEMC makes and amends rules for the National Electricity Market, elements of the natural gas market, and related retail markets.