Rule Change: Completed
Overview
The Australian Energy Market Commission (AEMC) has made a more preferable final rule in response to a rule change request from the Honourable Lily D’Ambrosio MP, Victorian Minister for Energy and Resources.
The final rule explicitly recognises distribution network resilience in the National Electricity Rules (NER). The final rule will provide regulatory clarity for Distribution Network Service Providers (DNSPs) and the Australian Energy Regulator (AER) around how to assess the economic efficiency of resilience expenditure proposals to reduce the risk and impact on consumers of power outages caused by severe weather events, taking into account the impacts of climate change.
Severe weather events in recent years have resulted in widespread long-duration outages in the National Electricity Market (NEM). Floods, bushfires and severe storms have impacted electricity networks, leaving thousands of customers without electricity supply for prolonged periods of time and consumers bearing the costs and risks of these events. Climate change is expected to further increase the costs and risks of these events in future.
We have made a more preferable final rule
Our final rule establishes a formal framework for distribution network resilience in the NER, which includes:
- new resilience expenditure factors that DNSPs and the AER must have regard to when proposing and assessing capital and operating expenditure for resilience
- formal Network Resilience Guidelines that the AER must develop, publish and maintain in accordance with a set of requirements. These guidelines may be new stand-alone guidelines or included as part of another guideline
- new distribution annual planning and reporting requirements for resilience.
The new resilience expenditure factors are a driver or input, among others, into satisfying the expenditure objectives in the NER, including:
- maintaining the reliability, safety, security and quality of supply of standard control services, and
- maintaining the reliability, security and safety of the distribution system through the supply of standard control services.
The final rule provides that, from 2 October 2025, the Victorian DNSPs may take the new resilience expenditure factors into account in their revised regulatory proposals for the 2026-31 regulatory control period, and the AER must take the new factors into account in its final distribution determinations.
Transitional rules will require that:
- the AER develops and publishes guidelines by 1 December 2026
- DNSPs must comply with the new annual planning and reporting requirements starting with their 2028 Distribution Annual Planning Reports (DAPRs).
Our final rule is part of a larger program of work to improve electricity distribution network resilience. Recent related work includes the Victorian Government’s two expert reviews into electricity network resilience following widespread prolonged power outages in Victoria. The AER also recently established a Value of Network Resilience, which will be complimented by the final rule.