Rule Change: Open

Overview

On 31 March 2022, the AEMC has made a more preferable draft rule that amends the National Gas Rules (NGR) to enable distribution connected facilities to participate in the Victorian Declared Wholesale Gas Market (DWGM).
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On 31 March 2022, the AEMC has made a more preferable draft rule that amends the National Gas Rules (NGR) to enable distribution connected facilities to participate in the Victorian Declared Wholesale Gas Market (DWGM).

Submissions to the draft determination and draft rule are due by 19 May 2022.

Draft rule 

The draft rule is designed to incorporate distribution connected facilities on an equivalent basis to existing transmission connected facilities. However, some modifications have been made to reflect that these facilities are connecting to materially different networks when compared to the transmission network.

The more preferable draft rule is broadly consistent with the intent and the changes proposed in the rule change request. Through extensive consultation with stakeholders and further analysis, other areas that were not identified in the original request have also needed to be addressed.

The key features of the draft rule are:

  • A new registration category has been created to cover distribution connected facilities. Gas injected from the facilities will be bid into the market and scheduled through the existing process.
  • Distributors are responsible for assessing facility constraints on its network and developing a methodology for managing them, with AEMO applying it through the existing schedules.
  • Distribution injection points will be allocated to entry capacity certificates zones, with any registered market participants allowed to participate in the auctions and secure capacity certificates that can be used to manage scheduling risk during periods of pipeline congestion.
  • A new clause to manage the transfer of title for injections into a declared distribution system and its associated interactions with the settlement process.
  • Expanded the existing rules to capture distribution connected facilities and clarifies their rights and obligations in relation to the participant compensation fund, allocations and determination of fees payable to AEMO, default notices and market suspension, and threats and interventions.
  • Allocates gas quality monitoring responsibilities to distributors in their networks, strengthens the approvals and compliance framework for entities monitoring gas quality and provides greater clarity on gas quality monitoring equipment requirements. 
  • Extended metering calibration to include distribution injection points. The draft rules also strengthen the compliance and enforcement framework for metering installations and enhance the transparency of market settlement outcomes.

Under the draft rule, the new framework will commence on 1 October 2023. As a consequence of the draft rule, AEMO will be required to update its procedures and systems to enable the inclusion of distribution connected facilities into the DWGM. Existing procedures should be updated no later than six months before the commencement date, and new procedures no later than three months before the commencement date.

Consultation process

On 21 October 2021, the Australian Energy Market Commission (AEMC) published a consultation paper on the rule change request. We received 10 submissions, which can be found below.

The AEMC also held a stakeholder workshop on 14 December 2021 to discuss stakeholder views on facilitated gas markets, including the DWGM. The material presented can be found on the hydrogen review project page

Submissions to the draft determination and draft rule are due on 19 May 2022.  

A stakeholder workshop was held on Friday 8 April 2022. The material presented in the workshop can be found below. 

Extension

On 12 January 2022, the Commission extended the timeframe to make a draft determination to 31 March 2022 under section 317 of the NGL. 

This extension was made to allow the Commission sufficient time to analyse and consult on stakeholder submissions made to the draft rule determination, reflecting the complexity of the issues involved.

Significant complexities are related to how responsibilities will be best managed between AEMO and the distribution system providers. There are potential law changes needed if AEMO’s role is significantly expanded into the distribution system. 

The interrelation of the rule change with the broader Review into extending the regulatory frameworks to hydrogen and renewable gases gives rise to additional complexity. 

Background

On 8 September 2021, the AEMC received a rule change request from the Victorian Minister for Energy, Environment and Climate Change to amend Part 19 of the NGR, which covers the Victorian DWGM.

The request seeks to change Part 19 of the National Gas Rules (NGR) in order to allow the market participation of such facilities, which may include, but are not limited to hydrogen, biomethane and other renewable gases.  

The proponent did not provide a proposed draft rule.

The request is available below.
 

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