On 3 April 2025 the AEMC received a rule change request from the Hon. Lily D'Ambrosio, Minister for Energy and Resources, Climate Action, and the State Electricity Commission to amend the National Gas Rules.  The rule change request proposes a short-term three year extension of the 2022 DWGM Dandenong LNG (DLNG) interim arrangements and a range of measures to improve transparency and oversight of the Dandenong liquefaction facility.

On 1 May 2025, the AEMC initiated consultation on the rule change request.

We are interested in your views on the issues raised in the rule change request and the proposed solution. Stakeholder submissions are due by 29 May 2025.

Background

On 15 December 2022, the AEMC made a final rule to enable the Victorian gas market operator to better manage the risk of curtailment for gas users during the tight demand-supply conditions expected from 2023 to 2025 (National Gas Amendment (DWGM interim LNG storage measures) Rule 2022 No. 4).

The Commission’s 2022 final rule: 

• empowered the Australian Energy Market Operator (AEMO) to act as buyer and supplier of last resort in relation to the DLNG storage facility for an interim period commencing on 1 January 2023 and ending on 31 December 2025
• set out how AEMO is to perform both the buyer and supplier of last resort functions 
• set out the supporting arrangements, including the contractual, cost recovery and proceeds distribution, and accountability and transparency arrangements that apply to these functions.

The interim arrangements expire at the end of 2025. When the Commission made its final rule, it was anticipated that by 2025 more permanent and fit-for-purpose measures to improve the reliability and supply adequacy (RSA) in the East Coast Gas System (ECGS) (the Stage 2 RSA reforms) would be implemented. The ECGS Supplier of Last Resort (SoLR) Mechanism proposed by Energy Senior Officials and the Victorian Minister could provide this permanent solution. The AEMC intends to complete its consideration of the Stage 2 rule change requests by June 2026, followed by an implementation period to enable AEMO and other parties sufficient time to put in place the required arrangements (if a rule in relation to the Stage 2 rule change requests is made). Therefore, it is possible that if the AEMC decides to make  these rules they would not be operational until 2027.

This timing will potentially leave a one to two year 'gap' between the expiry of the interim DLNG arrangements and other more permanent arrangements (if implemented). At the same time, the DWGM is expected to continue to face peak day reliability and supply adequacy threats.

It is against this backdrop that the proponent is seeking a three year extension of the interim DLNG arrangements.

Next steps

Our consultation paper seeks stakeholder feedback on the rule change request by 29 May 2025.