14 June 2012
On 14 June 2011, the AEMC decided to make a Rule that was initiated by the AEMC to correct minor errors and make non-material changes to the National Electricity Rules (the Rules) to promote clarity of meaning and to remove identified errors in the Rules. Schedule 1 of the National Electricity Amendment (Minor Changes) Rule 2012 No. 3 will commence operation on 26 July 2012 and Schedule 2 will commence operation on 1 July 2016.
14 June 2012
On 14 June 2012, the Commission published a draft rule determination and draft rule for the distribution network planning and expansion framework rule change request.
The Commission's draft determination is to make a more preferable rule. The draft rule is largely reflective of, and consistent with, the rule proposed by the Ministerial Council on Energy (MCE).
Submissions on the draft rule determination, including draft rule, close on 9 August 2012.
14 June 2012
On 14 June 2012, the AEMC initiated the rule change process on a rule change request proposed by ClimateWorks Australia, Seed Advisory and the Property Council of Australia. The rule change request seeks to make a more timely, clearer and less expensive process for connecting embedded generators to a distribution network. The AEMC has published a staff consultation paper. Submissions close on 9 August 2012.
07 June 2012
The AEMC has decided under section 317 of the National Gas Law (NGL) to extend the period of time for the making of the final rule determination on the reference service and rebateable service definitions rule proposal. The publication of the final rule determination has been extended to 26 July 2012. The reason the AEMC has decided to extend the period of time is for consideration of a number of complex issues that were raised in the AER’s submission on the draft determination.
07 June 2012
On 7 June 2012, the AEMC published a draft determination on the Major Energy Users’ rule change request in relation to potential generator market power in the National Electricity Market. The draft determination proposes to make no rule in respect of the rule change request. Requests for a public hearing close on 14 June 2012. Submissions on the draft determination close on 20 July 2012.
27 April 2012
The agenda for the AEMC’s public forum with Professors Littlechild and Yarrow is now available.
The public forum will be held on Wednesday 9 May 2012 at the Radisson Blu Hotel in Sydney. Professors Littlechild and Yarrow have provided advice to the AEMC on the AER and EURCC network regulation rule change requests. Registration to attend the public forum is now closed.
Please note that the AEMC’s public forum is being held on the same day and at the same location as the Standing Council on Energy and Resources’ (SCER) Review of the Limited Merits Review public forum. The SCER event is not related to the AEMC’s public forum. The SCER’s Limited Merits Review Secretariat can be contacted at LMR.Secretariat@ret.gov.au.26 April 2012
On 26 April 2012, the AEMC gave notice of an extension to the period of time for the making of the draft determination on the Potential Generator Market Power in the NEM rule change request. Under section 107 of the National Electricity Law the period of time for the making of the draft determination has been extended to 7 June 2012. The extension is due to a delay in receiving information to be used in consideration of the rule change request.
23 April 2012
Please be reminded that registrations to attend the AEMC’s public forum with Professors Littlechild and Yarrow will close on Thursday 26 April 2012.
The public forum will be held on Wednesday 9 May 2012 at the Radisson Blu Hotel in Sydney with Professors Littlechild and Yarrow who have provided advice to the AEMC on the AER and EURCC network regulation rule change requests.
In the afternoon, there will be another forum at the same venue on the Review of the Limited Merits Review hosted by the Standing Council on Energy and Resources (SCER). Please refer to the SCER website for further information.
02 March 2012
The Australian Energy Market Commission (AEMC) today released a directions paper on rule improvements to ensure that monopoly energy networks charge no more than necessary for electricity and gas services.
The directions paper provides the AEMC’s initial response to rule change requests from the Australian Energy Regulator (AER) and a coalition of companies who are large energy users called the EURCC (Amcor, Australian Paper, Rio Tinto, Simplot, Wesfarmers, Westfield and Woolworths). These rule change requests seek to change the way revenues are set for electricity and gas network businesses and are based on concerns that energy network businesses are overspending and passing on costs to customers.
The AEMC has agreed that some areas of the energy market rules could benefit from enhancement, specifically:
- how the regulated asset base is determined for individual network companies;
- how the rate of return is set for companies; and
- how to improve the process for making regulatory determinations.
Submissions on the directions paper are due by 16 April 2012.
AEMC Chairman, Mr John Pierce, said today the proposals under consideration were all about making sure that the energy market rules give the national regulator sufficient powers to ensure electricity and gas businesses charge no more than necessary for services.
“We are examining the regulatory framework’s ability to give consumers reliable energy services at efficient prices so they don’t pay more than needed. We are balancing other interests including those of network businesses and Australia’s need for investment in the energy sector.”
“As always we are focussed on providing the right regulatory environment for a sustainable energy industry which can respond to changing market conditions and supply Australia’s energy needs into the long term,” Mr Pierce said.
The AEMC’s consideration of process matters will cover how effectively consumers are able to engage in the process. This will include the access consumers have to information which the regulator uses to make its decision, and whether a new consultation step in the regulator’s process is justified. It may also extend to the way consumers, the regulator and network businesses interact generally.
Views on our thinking are sought in relation to three areas.
The AER is required to consider expenditure forecasts provided by electricity network businesses. If the AER does not approve the expenditure it may replace forecasts with its own estimates. Any expenditure beyond these forecasts is not subject to regulatory review. The AER is concerned that the rules restrict its ability to amend forecasts, resulting in network costs being set at higher than efficient levels.
The rules allow for network businesses to earn a return on their investments. There are different approaches to determining investment return for electricity distribution, electricity transmission and gas. The AER proposes that the three sectors move to a single approach – leaning towards the electricity transmission model in which there are periodic reviews of rate of return parameters which are then fixed for each company.
The Commission agrees that current rules are not satisfactory but that electricity distribution and gas approaches are more flexible and therefore preferable. We would prefer a single framework for all three sectors, but will consider the alternatives.One component of rate of return decisions is the cost of debt. The Commission agrees with the AER and EURCC that the current approach is problematic. Some aspects of the EURCC have some merit, particularly regarding the selection of an appropriate benchmark. The Commission will consider whether the rules should permit the AER to consider and adopt an option such as this.The Commission does not agree that there should be a different approach to the cost of debt for government owned and privately owned businesses.
The AER has raised issues relating to the ability of stakeholders to engage effectively in the regulatory determination process. Related to this is whether the AER can adequately consider material submitted as part of its process. The Commission shares some of these concerns and will consider improvements to the process in general to ensure stakeholders have opportunities to provide input and the AER has sufficient time for its decisions. The success of the process is also dependent on other factors, such as the capacity of stakeholders, and in particular consumers, to participate.
The AEMC will release its draft determination for public comment in July 2012. Its final determination on this matter is due by October 2012.
For information contact:
AEMC Chairman, John Pierce (02) 8296 7800
Media: Communication Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817
24 February 2012
The AEMC will hold a public forum (in workshop format) on the directions paper for the Economic Regulation of Network Service Providers, and Price and Revenue Regulation of Gas Services rule change requests, on 2 April 2012 in Melbourne.
Further details on the public forum will be provided when the directions paper is published, which is due to occur on 2 March 2012.