Rule Change

News Topic ID

From today consumers will get advance warnings to shop around before their energy discounts finish

01 February 2018

A new rule made by the AEMC to help energy consumers save money starts today.

The rule was made in response to a request from Minister Frydenberg following the Australian Government’s round table discussions with energy retailers last August.

The AEMC is making energy retailers notify electricity and gas customers when benefits in their contract, such as a discount, are about to end or change.

Notices will encourage customers to shop around and look for a better energy deal.

Households and small businesses often sign up to electricity and gas deals with rewards like price discounts or movie tickets. Customers may not be aware when these benefits end or change, and could be left financially worse off as a result.

From today, retailers must let customers know when benefits they have signed up to are about to end.

These notices have to include the date on which the customer’s benefits will change and a reference to the energy comparison website www.energymadeeasy.gov.au, which provides information on a range of alternative deals for energy shoppers.

By October 2018, retailers will be required to provide even more detailed information, including how much a customer will pay if they stay on the same deal after the change.

This means customers will know when their benefit is changing, and be able to readily compare their existing deal with other deals and choose a better one if they want to.

The new rule is expected to reduce the number of customers remaining on contracts with expired or reduced benefits, or rolling onto “standing offers” which tend to be higher priced. It will also increase consumer engagement and improve retail competition.

This rule was made in response to a rule change request from the Honourable Josh Frydenberg MP, Minister for the Environment and Energy on behalf of the Australian Government. The rule change request was submitted following the Australian Government’s round table discussions with energy retailers in August 2017, and reflects recommendations made in the AEMC’s 2017 retail energy competition review.

The AEMC expedited this rule in recognition of its importance.

We also extended the rule’s coverage so that it also applies to gas retailers and to all benefits, not just financial benefits.

While the first notices will be issued from 1 February, the AER will develop guidelines on how retailers should calculate and present more detailed information, including what customers might pay if they remain on their current contract. The guidelines are to be published by 1 July 2018 and retailers’ notices must comply with the guidelines by 1 October 2018.

Media: Prudence Anderson 0404 821 935 or (02) 8296 7817

Strengthening protections for customers requiring life support equipment

19 December 2017

The AEMC today published a final rule in response to a rule change request from the Australian Energy Regulator (AER) to strengthen protections for customers requiring life support equipment, for example a ventilator or kidney dialysis machine.

There are already rules in place that limit when electricity retailers and distributors are able to interrupt supply to life support customers, for example to undertake planned maintenance. In these limited circumstances, customers must be given at least four business days written notice.

Customers are generally required to provide a medical certificate to be placed on the retailer or distributor’s life support register, although the AER acknowledges retailers and distributors register customers when they are advised by the customer, whether or not a medical certificate is provided.

The final rule aims to formalise and strengthen the protection framework by clarifying that protections apply from the time customers first inform their retailer or distributor they require life support equipment. In addition, retailers and distributors will be required to provide information on the customer’s rights and obligations under the life support rules within five days of the initial contact.

The final rule will also require retailers and distributors to follow a more clearly defined process for confirming a customer’s eligibility for the register and for removing a customer from the register when they move or no longer need life support equipment.

The new arrangements roll out from 1 February 2018.

Media: Bronwyn Rosser 0423 280 341 or (02) 8296 7847

Final rule to support a competitive market for ‘behind the meter’ battery storage and other distributed energy resources

12 December 2017

The AEMC today made a final rule to support a competitive market in ‘behind the meter’ batteries and other distributed energy resources by limiting distribution network businesses’ ability to own and control these assets.

More competition encourages innovation in high-tech energy options for consumers, while also allowing households and businesses to have greater control over how their energy assets are used.

Under the final rule, distribution network businesses will be restricted from earning regulated returns on distributed energy resources installed behind the meter. Distribution businesses will still be able to access these resources to help run the network more efficiently – but they will need to buy these services from the consumer or the consumer’s energy service provider.

This final rule has been made in response to rule change requests from the COAG Energy Council and the Australian Energy Council to support the development of a competitive market in behind the meter energy resources as the electricity system transforms.

More consumers are now buying and selling power, and the uptake of distributed energy resources, such as battery storage, rooftop solar and smart home systems, is accelerating. Many of these technologies are capable of providing multiple value streams, but not simultaneously. For example, they can:

help consumers reduce electricity bills
help electricity networks manage peaks in demand
compete in the wholesale electricity market by exporting electricity
provide services that help make the system secure, such as frequency control.

By allowing consumers, rather than networks, to choose how they want to use their batteries and other distributed energy resources, the final rule addresses the risk of distribution businesses favouring network benefits at the expense of maximising benefits for the electricity system as a whole.

Specifically, the final rule:

restricts distribution network service providers' ability to earn regulated returns on assets located behind the meter, on the consumer’s side of the connection point
updates the framework setting out how the Australian Energy Regulator (AER) should determine which network services are regulated, and which are open to markets
requires the AER to publish a distribution service classification guideline setting out its approach to classifying distribution services.

Media: Communications Director, Prudence Anderson, 0404 821 935 or (02) 8296 7817

New deal for fast energy – five minute settlement

28 November 2017

The Australian Energy Market Commission today made a final rule to change the settlement period for the electricity spot price from 30 minutes to five minutes, starting in 2021.

This fundamental change will help get the electricity wholesale market ready for new technologies that enable the power system to operate in a more dynamic way.

Five minute settlement provides a better price signal for investment in fast response technologies, such as batteries, new generation gas peaker plants and demand response.

These fast responders are needed to support the increasing penetration of variable generation in the market.

“With more wind and solar generation entering the market, along with the retirement of thermal generators, there is an important role for fast response generation and services to plug the gaps when the wind isn’t blowing and the sun isn’t shining,” said AEMC Chairman John Pierce.

Moving to five minute settlement will align the physical electricity system – which matches demand and supply of electricity every five minutes – with the price signal provided by the market for that five minute period.

“Price signals that align with physical operations lead to more efficient bidding, operational decisions and investment,” said Mr Pierce.

“Over time, this flows through to lower wholesale costs, which should lead to lower electricity prices than in a market with 30 minute settlement. Wholesale costs make up around one third of a typical electricity bill.”

Five minute settlement will start on 1 July 2021. This gives industry time to adjust to this major change which affects the spot and contract markets, metering and IT systems.

The timeframe balances the need to capture the benefits of moving to five minute settlement as soon as possible against the transitional costs and risks. It also gives industry a timetable for building and developing new fast response generation and technologies in preparation for the change in three years’ time – so this investment can start happening now.

The Australian Energy Market Operator (AEMO) will work closely with industry to develop an implementation plan, with policy guidance from the AEMC. The Australian Energy Regulator (AER) will monitor and report on the conduct of market participants and the effectiveness of competition throughout the transition.

The five minute settlement rule change proposal was submitted by Sun Metals, a zinc refinery and large energy user. Under the National Electricity Rules, any individual, group or organisation can lodge a rule change request or submission with the AEMC.

Media: Prudence Anderson, Communications Director, 0404 821 935 or (02) 8296 7817

Changes to pricing arrangements during periods of spot market suspension

10 October 2017

The AEMC has made a final rule that simplifies the process for setting prices if the spot market is suspended, and establishes a simpler, more workable market suspension pricing framework.

AEMO suspends the spot market when the market cannot operate as normal, for example, if there is no electricity supply due to a black system event. In these situations, AEMO must determine the prices which generators are paid, and customers receive, while the issues which led to the suspension are being resolved.

The key features of the final rule are:

Removal of two market suspension pricing regimes from the National Electricity Rules. These are the neighbouring region pricing and pre-dispatch pricing schedule regimes.
Allowing AEMO to apply dispatch pricing at any time during a market suspension period if:
- in AEMO’s reasonable opinion, it is practicable to resume central dispatch and the determination of dispatch prices and ancillary service prices, and
- the market was suspended other than in response to a jurisdictional direction.
If AEMO suspends the market in response to a jurisdictional direction, the relevant jurisdiction must agree to a return to dispatch pricing before this pricing regime can apply.
Harmonising the price scaling provisions applicable during market suspension with the pricing scaling provisions applicable for other administered prices.

The rule starts on 1 December 2017.

Media: Prudence Anderson, Communications Director, 0404 821 935 or DL (02) 8296 7817

Final rule allowing AEMO to facilitate secondary trading of inter-regional settlements distribution units

10 October 2017

The AEMC today made a final rule enabling the Australian Energy Market Operator (AEMO) to provide a platform for secondary trading of settlements residue distribution units.

The final rule, which follows a rule change request from Westpac Banking Corporation:

enables auction participants to offer their previously purchased units for sale at subsequent auctions facilitated by AEMO
requires AEMO to distribute auction proceeds to either the relevant transmission network service provider (TNSP) or auction participant
requires secondary sellers to provide a margin at the same time as they submit offers to the auction. In case of a default, AEMO must apply that margin to the amounts owing to AEMO by the defaulting party.
requires TNSPs to be responsible for any shortfall in auction proceeds payable to the secondary sellers arising from a buyer default.

Enabling AEMO to provide a platform for secondary trading of units will, if implemented, improve liquidity in the market for these units. This improved liquidity is likely to increase interstate trade of electricity, improve risk management and increase competition.

The final rule, which is a more preferable rule, addresses the same issues as Westpac's proposed rule, but takes a different approach in relation to the consequences of counterparty default in the secondary market.

Media: Prudence Anderson, Communications Director, 0404 821 935 or DL (02) 8296 7817

EXPLAINER

Regions of the national electricity market (NEM) have different levels of demand and differently priced generation, which leads to different wholesale prices. Price separation between regions generally occurs when there is not enough interconnector capacity to equalise the spot price flowing from a lower to higher priced region. The difference between the price paid in the importing region and the price received in the exporting region, multiplied by the amount of flow for each interconnector for a trading interval, results in surplus inter-regional settlements residue.

AEMO auctions the rights to a share of this settlements residue on a quarterly basis, which provides auction participants with an additional hedging tool to help manage inter-regional price risk. While secondary trading of previously purchased settlements residue distribution units is not prohibited by the National Electricity Rules (NER), Westpac’s rule change request proposed a new platform for secondary trading based on an AEMO-facilitated auction.

Stakeholder workshop on the declaration of lack of reserve (LOR) conditions rule change request

26 September 2017

The AEMC is hosting a stakeholder workshop to facilitate consultation on a rule change request from AEMO that seeks to redefine the conditions under which it can declare a lack of reserves (LOR). AEMO uses the LOR framework to signal to the market that electricity reserves are running low. This workshop is being held in response to numerous requests from stakeholders for more information on AEMO’s proposal. .

The workshop aims to facilitate stakeholders’ understanding of the new LOR model proposed by AEMO and provide stakeholders with the opportunity to ask any questions associated with the rule changes request. In the workshop, AEMO will provide context for the rule change request including a summary of the problem they are facing in providing clear signals to the market and getting a timely response when more reserves are needed. AEMO will also outline the solution proposed in the rule request and how this will help them continue to provide reliable supplies of electricity.

In its request, AEMO noted it wants to have this rule in place this summer to enable it to trigger the LOR framework under a wider range of risk scenarios than those presently allowed for in the definitions.. The Commission is therefore treating this rule change as a priority while still allowing industry and consumers have sufficient opportunity to provide input under the standard timeframes for consultation.

Details of the workshop are as follows

Date: Thursday 5 October 2017

Time: 2pm-3:30pm AEDT Sydney/Melbourne time

Location: via teleconference

An agenda, dial-in details and any other relevant documents will be circulated to registered attendees prior to the workshop.

To register for the workshop, please contact Sarah-Jane Derby at sarah.derby@aemc.gov.au or on (02) 8296 7823 by Tuesday 3 October 2017.

Final rule on improvements to the Natural Gas Bulletin Board

26 September 2017

The AEMC today made a final rule on the COAG Energy Council’s request to enhance the breadth and accuracy of information provided to the market through the Natural Gas Bulletin Board.

The final rule is part of the AEMC’s package of gas market reforms, endorsed by the Council, which are designed to support faster and more efficient gas trading and access to pipeline transportation along the east coast of Australia.

The Bulletin Board, managed by the Australian Energy Market Operator, provides up-to-date gas system and market information to help participants make more informed decisions about trading, investing in, or using gas.

The final rule will increase the amount and frequency of data reported on the Bulletin Board, along with greater data accuracy requirements and a stronger compliance framework. The final rule reflects the recommendations made by the Commission in our East Coast Gas Market and Pipeline Frameworks review and outlined in the Stage 2 Final Report: Information Provision.

The final rule:

establishes a new registration framework and threshold to clarify who has to provide information to the Bulletin Board
establishes a new reporting framework so that facilities that may have a material impact on the market are required to provide information
introduces a reporting standard so information is presented in a consistent way
changes the way the costs of operating the Bulletin Board are recovered so there is consistency in the way costs are collected from participants
adds a biennial reporting requirement for AEMO to make sure the Bulletin Board stays up to date and useful.

This request was fast-tracked due to the importance of an efficiently operating gas market and also because the AEMC had already consulted extensively on potential changes to the Bulletin Board through our Gas review.

Under the final rule, AEMO must prepare and implement the new Bulletin Board Procedures by 30 April 2018. Changes to the cost recovery provisions will start in May 2018 the remaining parts of the rule will start in September 2018.

Media: Prudence Anderson, Communications Director, 0404 821 935 or DL (02) 8296 7817

Final rule on application of revised rate of return guidelines for TasNetworks

26 September 2017

The AEMC has made a final rule determination that amends the timing of the application of the Australian Energy Regulator’s revised Rate of Return Guidelines to TasNetworks’ distribution business.

The final rule will result in the current, rather than the revised, Rate of Return Guidelines applying to TasNetworks’ revenue proposals in its regulatory control period starting 1 July 2019 for both its transmission and distribution businesses.

TasNetworks’ rule change request identified that under arrangements put in place last year, the revised Rate of Return Guidelines would have applied to TasNetworks’ distribution business and the current Rate of Return Guidelines to its transmission business in the aligned regulatory control period.

By basing its revenue proposals on one rather than two Rate of Return Guidelines, the final rule will reduce costs and uncertainty for TasNetworks in preparing and making its proposals. This change may also make it easier and provide a more streamlined assessment process for stakeholders and the Australian Energy Regulator. TasNetworks is the only network business affected by this inconsistency. The final rule will not alter any arrangements for other network service providers.

The final rule is substantially the same as the proposed rule except for some minor drafting amendments.

Media: Prudence Anderson, Communications Director, 0404 821 935 or DL (02) 8296 7817.

Extension for final rule on Generating System Model Guidelines

12 September 2017

The AEMC today extended the period of time for making a final determination for the Generating System Model Guidelines rule change request by one week. The extension is due to the rule change proposal’s interdependency with the Managing power system fault levels rule change request.

The final determination for both rules will now be made on 19 September 2017.

Media: Prudence Anderson, Communications Director, 0404 821 935 or DL (02) 8296 7817.

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