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26

AEMC invites gas pipeline service providers to update new Scheme Register

16 July 2009

AEMC Chief Executive, Steven Graham, today invited gas pipeline service providers to send their Scheme Register updates to the AEMC.

The new AEMC website (re-launched on 1 June 2009) includes new and expanded information on the Scheme Register.

This is a register of all gas pipelines that are, or have been, subject to regulation under the National Gas Law or the former regime (that is, the Gas Pipelines Access Law).

The Scheme Register is maintained by the AEMC as required by the National Gas Rules (NGR).

"In recent weeks we have been informed by stakeholders that some pipeline information held by the Scheme Register may not be up to date," Mr Graham said.

"We would like to thank everyone who has contacted us and provided updated information.

"In light of feedback received, and in accordance with rule 134 of the National Gas Rules, we would like to extend an invitation to all service providers to bring forward their updates for the Scheme Register," he said.

In accordance with rule 134 of the NGR, when the description of a scheme pipeline is affected by an extension or capacity expansion, the service provider must give the AEMC a revised description of the pipeline, incorporating the extension or expansion, for inclusion in the register.

In accordance with rule 133(3) of the NGR the Scheme Register is to include for each pipeline:

  • a description of the pipeline (including, in the case of a covered pipeline, historical information about extensions and capacity expansions occurring while the pipeline was covered); and
  • the pipeline's classification and regulatory history under the NGL and the old scheme.

In accordance with rule 133(4) of the NGR the Scheme Register is to include the text of current and former:

  • greenfields pipeline incentives; and
  • tender approval decisions; and
  • coverage determinations; and
  • light regulation determinations; and
  • applicable access arrangements.

If you have documents which need to be included in the scheme register please email them to us at the AEMC at scheme.register@aemc.gov.au.

For information contact:
AEMC Project Leader, Meredith Mayes, (02) 8296 7800
AEMC Communication Manager, Prue Anderson (02) 8296 7800 or 0404 821 935

National Gas (Australian Energy Market Operator) Amendment Rules 2009

01 July 2009

On 1 July 2009, the National Gas (Australian Energy Market Operator) Amendment Rules 2009 made by the South Australian Minister commenced operation. These Rules were consolidated into version 2 of the National Gas Rules.

Consultant reports for Review into the Use of Total Factor Productivity for the Determination of Prices and Revenues

12 June 2009

AEMC Senior Director, Ms Anne Pearson, today released three consultants’ reports for public comment in relation to the Review into the Use of Total Factor Productivity for the Determination of Prices and Revenues.

The consultants' reports were commissioned to inform the AEMC on issues arising within this review. They are important contributions to our public consultation which will help inform the development of Review reports in the months ahead.

The reports are:

Ms Pearson asked stakeholders to note that these reports cover particular, and not all, issues relating to the use of Total Factor Productivity in economic regulation.

"Other issues are still to be considered during the course of this review," she said.

"Accordingly we are continuing with our planned consultation approach as outlined in this Review's Revised statement of approach (28 April 2009). We anticipate taking into account further information, including submissions from interested parties, as we develop the draft report for this review."

Interested parties wishing to comment on any of the matters raised in these reports are invited to lodge their submissions online through the home page of the AEMC's website http://www.aemc.gov.au by COB Friday 31 July 2009.

CEDA Energy Forum Presentation by AEMC Chairman

19 February 2009

Chairman of the Australian Energy Market Commission (AEMC), Dr John Tamblyn, today presented a paper to the CEDA Energy Forum which considers whether the nation's energy markets are capable of transitioning to a significantly lower carbon-intensity.

Referring to the AEMC Review of Energy Market Frameworks in Light of Climate Change Policies, Dr Tamblyn said the Commission's over-arching finding is that the market frameworks are broadly resilient to the challenges of reducing greenhouse gas emissions.

The paper titled "The Reform Journey Continues: Energy Markets and Climate Change Policies" refers to the AEMC Review's 1st Interim Report (December 2008) which identifies a small number of key risks where careful consideration of options for change is required.

These relate to:

  • Managing reliability in the short term, given prevailing tight supplies in some regions through the early years of this transition;
  • Providing regulated networks and generators with the right signals to connect large-scale remote renewables efficiently; and
  • Enabling the efficient costs of the CPRS and RET to be reflected in bills to customers - and empowering consumers with the ability to respond.

The detailed reasoning underpinning these over-arching findings is discussed in the CEDA Energy Forum Paper.

Dr Tamblyn said today that these preliminary findings are now open for public consultation and that stakeholder submissions would help test the 1st Interim Report's preliminary findings.

"Stakeholder consultation will inform the next phase of our review to identify and assess potential options for change," he said.

Strengths of the current framework

"The current market framework has proved to be resilient in delivering reliable energy supplies at efficient prices and supporting significant new investment in generation capacity and natural gas supplies. The dominant view among industry stakeholders is that the current frameworks are capable of delivering the required, much larger volumes of new investment implied by the CPRS and expanded RET. There are substantive reasons for this which reflect the underlying robustness of the market design choices made at the start of the market in 1998," Dr Tamblyn said.

"While the introduction of the CPRS and expanded RET will alter the size and form of price and non-price signals and commercial incentives provided under the current energy market frameworks, there is no reason to conclude that the effectiveness of the signals will diminish. Nor is it clear why the ability of market participants to respond to those signals would be diminished by the introduction of the CPRS and RET. There are other wider challenges affecting energy markets, including the global credit crisis and its impact on Australia as an importer of capital. Well designed and functioning energy market frameworks can only contribute positively in dealing with these wider challenges".

"Competitive energy markets continue to provide the most effective means of responding to changing economic and policy circumstances - as long as they are supported by an appropriate framework of rules and regulations.

First Interim Report

"Our 1st Interim Report has concluded that a number of issues raised by our initial scoping paper are not material to the ongoing ability of energy markets to deliver efficient outcomes for consumers in the short and long term. We will use stakeholder submissions on our 1st Interim Report to test these findings.

"The Review is currently focussed on those areas where some changes may be required to ensure the ongoing efficiency, reliability and security of energy supplies after the CPRS and RET are introduced.

"In particular, we found that the proposed CPRS is likely to create risks in relation to the regulation of energy retailing" Dr Tamblyn said.

"Our Report also identifies the possibility of a reserve shortfall in the short term due to the lead time required to build new generation capacity after a period of policy uncertainty. It also concludes that there may be a need to re-examine the current ‘tool kit' available to the system operator to deal with any such capacity shortfall.

"We also believe that the expanded national RET is likely to place substantial stresses on the current market arrangements for new generation connection to transmission networks, and that the RET may potentially lead to additional network congestion on electricity transmission networks," he said.

Next steps

The next stage of the AEMC Review of Energy Market Frameworks in light of Climate Change Policies will assess public submissions on the implications of these issues and make recommendations in June 2009 (Second Interim Report) on potential mitigation measures for the issues that have been identified.

The AEMC will provide its final advice to Ministers in September 2009.

For further information contact:

AEMC Chairman, Dr John Tamblyn 02 8296 7800 or
AEMC Communications Manager, Prue Anderson 02 8296 7800 or 0404 821 935

AEMC calls for submissions on climate change policy implications for energy markets

23 December 2008

The Australian Energy Market Commission (AEMC) today published the First Interim Report on its Review of Energy Market Frameworks in Light of Climate Change Policies.

The report’s preliminary conclusion is that existing market rules and regulations are generally robust and capable of handling the stresses likely to be caused by the Australian Government’s Carbon Pollution Reduction Scheme (CPRS) and expanded Renewable Energy Target (RET).

AEMC Chairman, Dr John Tamblyn, said competitive energy markets continue to provide the most effective means of responding to changing economic and policy circumstances – as long as they are supported by a strong framework of rules and regulations.

“Our 1st Interim Report has concluded that a number of issues raised by our initial scoping paper are not material to the ongoing ability of energy markets to deliver efficient outcomes for consumers in the short and long term.

“However, it identifies several areas of risk where changes to market frameworks may be required to ensure the ongoing efficiency, reliability and security of energy supplies after the CPRS and RET are introduced.

“The next stage of the Review will assess public submissions on the implications of these issues and make recommendations in June 2009 (Second Interim Report) on potential mitigation measures for the issues that have been identified,” Dr Tamblyn said.

“In particular, we found that the proposed CPRS is likely to create risks in relation to the regulation of energy retailing” Dr Tamblyn said.

“Our Report also identifies the possibility of a reserve shortfall in the short term due to the lead time required to build new generation capacity after a period of policy uncertainty. It also concludes that there may be a need to re-examine the current ‘tool kit’ available to the system operator to deal with any such capacity shortfall.

“We also believe that the expanded national RET is likely to place substantial stresses on the current market arrangements for new generation connection to transmission networks, and that the RET may potentially lead to additional network congestion on electricity transmission networks,” he said.

“This will be an area for further analysis in the next stage of the review,” Dr Tamblyn said.

Submissions on the 1st Interim Report are due 20 February 2009.

For further information contact:
AEMC Chairman, Dr John Tamblyn 02 8296 7800 or
AEMC Communications Manager, Prue Anderson 02 8296 7800 or 0404 821 935

 

AEMC confirms need to remove retail energy price regulation in South Australia

18 December 2008

The Australian Energy Market Commission (AEMC) today published the Second Final Report on its review of competition in South Australian electricity and gas retail markets, recommending that price regulation should end no later than December 2010 for electricity and June 2011 for gas.

The report concludes that the existing framework for regulating energy retail prices should be replaced by a transparent price monitoring and reporting framework.

The report has been presented to the South Australian Government and the Ministerial Council on Energy for consideration.

AEMC Chairman, Dr Tamblyn, said the report completed the AEMC’s review of retail energy competition in South Australia.

“In response to the changing economic and market conditions in South Australia, we have recommended a flexible and efficient approach to keep prices in line with costs which is combined with a prudent and transparent oversight of market pricing performance,” Dr Tamblyn said.

“The recommended price monitoring regime represents an effective balance between maintaining the viability of energy retailing in South Australia into the future, and providing appropriate oversight of the retail energy market for consumers.

“The recommended price monitoring and reporting framework should be introduced for a period of at least three years following the removal of retail price regulation. Within that period, the AEMC should review the efficacy of the framework and its ongoing need,” Dr Tamblyn said.

Under the proposed framework:

  • All retailers set and amend their own standing contract and default contract prices.
  • All retailers must meet a range of publication requirements for changes to their standing contract prices.
  • The Essential Services Commission of South Australia (ESCOSA) would monitor trends in standing, default and market contract prices in the competitive market, including the estimated annual customer bill for each standing contract and trends in the estimated savings available under market contracts relative to standing contracts.
  • This information would form the basis of price monitoring reports that ESCOSA would publish every 6 months in addition to its existing market monitoring and reporting functions. This additional price monitoring role would be supported by the continuation of ESCOSA’s current energy market monitoring and reporting functions.
  • ESCOSA would conduct additional oversight of retail gas prices in regional areas.
  • The South Australian Government would retain a conditional reserve pricing power, enabling it to re-introduce regulations if the level of competition deteriorates.
  • The existing non-price consumer protection framework would continue.

For further information contact:
AEMC Chairman, Dr John Tamblyn 02 8296 7800 or
AEMC Communications Manager, Prue Anderson 02 8296 7800 or 0404 821 935

AEMC Draft Report on energy retail price regulation in South Australia

14 October 2008

The Australian Energy Market Commission (AEMC) today published the Second Draft Report of its Review of the Effectiveness of Competition in Electricity and Gas Retail Markets in South Australia, advising on ways to remove retail price regulation in the State.

AEMC Chairman, Dr John Tamblyn, said the Commission’s Second Draft Report was prepared following the Commission’s finding in September 2008 that competition is effective in electricity and gas retailing.

“South Australia requires a flexible and efficient policy approach to retail pricing in the face of changing economic and market conditions – input costs are increasing, the balance between energy supply and demand is tightening and there is evident need for new investment in network and generation capacity,” Dr Tamblyn said. “Policy responses to climate change risk will also have a significant impact on energy market costs and performance.”

Dr Tamblyn said the South Australian review has established that effective competition is keeping prices in line with the costs of supply.

“Combined with a strong consumer protection framework, this evidence provides a sound basis for phasing out price regulation while continuing to protect the interests of energy consumers,” he said.

“The Commission recommends replacing price regulation with a transparent price monitoring regime, accompanied by the capacity to re-regulate prices if competition deteriorates substantially.”

The Report concludes that the combination of competitive pricing, transparent price monitoring, the threat of price re-regulation if warranted, and the established consumer protection arrangements would represent a more effective and flexible oversight regime for the emerging energy market challenges.

The AEMC is now seeking submissions on all aspects of the report’s draft recommendations in relation to the phasing out of retail price regulation. Stakeholders and interested parties are invited to attend a public forum in Adelaide on 7 November 2008 at which the Commission will present its draft recommendations detailed in this report.

For information contact AEMC:
AEMC Chairman, John Tamblyn 02 8296 7800
AEMC Communication Manager, Prue Anderson 02 8296 7800 or 0404 821 935

AEMC publishes the First Final Report of its review of the effectiveness of energy retail competition in South Australia

19 September 2008

The Australian Energy Market Commission (AEMC) today published the First Final Report of its Review of the Effectiveness of Competition in Electricity and Gas Retail Markets in South Australia – confirming its preliminary finding that retail competition for both electricity and gas is effective.

AEMC Chairman, Dr John Tamblyn, said the Commission’s Final Report was prepared following extensive consultation with a wide range of stakeholders.

“The majority of small energy customers in South Australia know about energy retail competition and are participating actively in the energy market,” Dr Tamblyn said.

“This is particularly evident from the high rate at which customers are switching to energy market contracts. More than 80% of residential energy customers are aware of retail competition and more than 60% have switched to market contracts,” he said.

“There is also evidence of strong rivalry between energy retailers as they compete to gain and retain market share by offering customers the choice of alternative prices and services.”

Dr Tamblyn noted that market entry and expansion by new energy retailers has strengthened competition and customer choice in the energy retail market.

“New entrant retailers have continued to win market share from the two established South Australian retailers and now account for more than 40% of small customers in both the electricity and gas markets”.

The AEMC’s report has recognised there is now a likelihood of increasing energy costs and prices in future associated with an emerging need for new generation investment and prospective policies to address climate change risks.

Commenting on these potential developments, Dr Tamblyn said, “The competitive energy retail market should be able to accommodate such changes in real energy costs, provided retail prices are able to adjust in response, allowing competitive retail margins to be maintained.”

 Given the Commission’s finding that competition is effective, it is required to provide advice to the South Australian Government and Ministerial Council on Energy on options to phase out the current retail price regulation arrangements in South Australia.

For information contact:
AEMC Chairman, John Tamblyn 02 8296 7800
AEMC Communication, Prue Anderson 02 8296 7800 or 0404 821 935


AEMC starts Review of Implications for Energy Markets in light of Climate Change

25 August 2008

Today, the Chairman of the Australian Energy Market Commission (AEMC), Dr John Tamblyn, announced the Review of electricity and gas market frameworks in the light of new climate change policies. The Ministerial Council on Energy has provided the Terms of Reference to the AEMC.

The Review is to focus on assessing how the introduction of the Carbon Pollution Reduction Scheme (CPRS) and the expanded Renewable Energy Target may affect Australia's energy market frameworks and determine what, if any amendments are needed to those frameworks
as a result.

"Energy markets in Australia are well designed and functioning to internationally respected standards of efficiency", Dr Tamblyn said.

"AEMC decision making is guided by the objectives set by the National Electricity Law (NEL) and the National Gas Law (NGL). Reviews conducted by the AEMC must have regard to these objectives which are to promote efficient investment in, and efficient use of, electricity and natural gas services for the long-term interests of consumers with respect to price, quality, reliability and security of supply.

"The outcomes of the Review will provide advice to the MCE on adjustments that may be necessary to the energy market frameworks so that the objectives of the NEL and NGL can continue to be met," Dr Tamblyn said.

Dr Tamblyn noted that the planned introduction by the Australian Government of the CPRS and expanded national target for renewable generation will influence a wide range of economic activity.

"It is timely in advance of these new policies being implemented, to review whether the frameworks need to be amended to ensure that energy markets continue to operate efficiently and reliably in the interests of consumers because of the changed commercial incentives and behaviour these policies will create.

"We welcome the Ministers' request for advice on this matter and look forward to engaging with our stakeholders on these important issues," he said.
The Review is scheduled to provide its final report to Ministers in September 2009.

Consultation papers will call for public submissions at key points throughout the Review process:

30 Sep 2008 Scoping paper
31 Dec First Interim Report
Early 2009 Public Forum
30 Jun 2009 Second Interim Report

The Ministerial Council on Energy has asked the AEMC to establish a stakeholder Advisory Committee comprising of energy market operators and planners, regulators, industry and energy end user groups. More information on the Advisory Committee will be posted once the membership is finalised.

AEMC starts consultation on the effectiveness of energy retail competition in South Australia

04 July 2008

The Australian Energy Market Commission (AEMC) today published the Draft Report of its Review of the Effectiveness of Competition in the Electricity and Gas Retail Markets in South Australia – finding that retail competition for both electricity and gas is effective.

AEMC Chairman, Dr John Tamblyn, said the AEMC’s preliminary finding that competition is effective for small electricity and natural gas customers in South Australia will now be open for a period of public consultation and comment. Submissions should be lodged by 13 August 2008.

“The majority of small energy customers in South Australia know about energy retail competition and are participating actively in the energy market,” Dr Tamblyn said.

“This is particularly evident from the high rate at which customers are switching to energy market contracts. More than 80% of residential energy customers are aware of retail competition and more than 60% have switched to market contracts,” he said.

“There is also evidence of strong rivalry between energy retailers as they compete to gain and retain market share by offering customers the choice of alternative prices and services.”

Dr Tamblyn noted that market entry and expansion by new energy retailers in South Australia has strengthened competition and customer choice in the energy retail market.

“New entrant retailers have continued to win market share from the two established South Australian retailers and now account for more than 40% of small customers in both the electricity and gas markets”.

The AEMC’s draft report has recognised there is now a likelihood of increasing energy costs and prices in future associated with an emerging need for new generation investment and any prospective policies to address climate change risks.

Commenting on these potential developments, Dr Tamblyn said, “The competitive energy retail market should be able to accommodate such changes in real energy costs, provided retail prices are able to adjust in response, allowing competitive retail margins to be maintained.”

The AEMC now seeks detailed submissions on all aspects of the draft report’s preliminary findings in relation to the state of energy retail competition in South Australia. Stakeholders and interested parties will be invited to attend a public forum in Adelaide on 17 July 2008 at which the AEMC will present the preliminary findings detailed in its Draft Report.

Following these community consultations the AEMC will provide its Final Report on the state of energy retail competition in South Australia in September 2008 to the South Australian Government and the Ministerial Council on Energy (MCE).

If the AEMC’s final assessment is consistent with the findings of its First Draft Report , the AEMC is then required to provide advice to the South Australian Government and MCE on options for modifying or removing the current retail energy price regulation arrangements in South Australia.

For information contact
AEMC Chairman John Tamblyn 02 8296 7800
AEMC Communication, Prue Anderson 02 8296 7800 or 0404 821 935

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