The Australian Energy Market Commission (AEMC) has made a final rule extending the Australian Energy Market Operator’s (AEMO) interim buyer and supplier of last resort arrangements for Victoria's Dandenong LNG storage facility.  

The interim arrangements are extended by four years through to 2029, providing a backstop arrangement to help manage projected gas supply risks projected from 2026, while permanent market reforms are implemented.  

The facility, located on Melbourne's outskirts, provides critical backup capacity that can rapidly inject gas during peak demand periods and supply emergencies.  

The extended interim arrangements continue to require AEMO to purchase all uncontracted storage capacity each March, functioning as an insurance product for the Victorian gas market. Importantly, it introduces additional measures to mitigate the risk that AEMO incurs unnecessary costs that it then passes on to Victorian gas consumers.  

The four year extension, one year longer than the Victorian Government requested, ensures adequate time for the development of a fit-for-purpose and enduring solution to manage security and reliability threats in the DWGM.  

This includes the AEMC’s consideration of the Commonwealth government's permanent east coast gas market reforms, including a supplier of last resort mechanism which, if implemented, is expected to be operational by 2027.

The final rule also introduces permanent transparency measures requiring better information sharing about the liquefaction facility’s operations.  

These measures will help AEMO and market participants better understand facility constraints and refill capacity, enabling better decisions about when to use stored gas. The measures also enable AEMO to coordinate maintenance schedules to ensure facilities are available during critical winter periods.

AEMC Chair Anna Collyer said the rule provides certainty while maintaining appropriate regulatory boundaries.

"The final rule ensures interim arrangements remain a targeted backstop measure while permanent solutions are developed," Ms Collyer said.

"We've also implemented permanent transparency improvements for the liquefaction facility that will benefit market operations regardless of contracting arrangements."

The extended interim arrangements provide important insurance against supply risks during the transition period to permanent market solutions.

The final rule responds to a rule change request submitted by Victorian Energy Minister Lily D'Ambrosio in April 2025.  

For more information, visit the project page.  

Media: Jessica Rich | 0459 918 964 | media@aemc.gov.au