Insights

07/09/17

Australian Energy Market Update | Period up to 4 September 2017

It has been four weeks since our last update and energy continues to camp on the front page of the dailies.  Some of the major regulatory developments over this period include:

  • In the face of politicisation and criticism over the number and role of regulatory bodies (such as AEMO and AEMC), the AER has published a Strategic Statement setting out its objectives and priorities.
  • The AER issued a discussion paper on how it should undertake new wholesale market monitoring designed to assess the competitive dynamics in the NEM, given rising prices and the changing generation mix. Recent amendments to the NER require the AER to report on wholesale market performance every two years.  This latest review will follows a giddy series of market reviews, including the ACCC East Coast Gas Inquiry, the recent ACCC retail market inquiries (both electricity and gas), AEMC’s review of retail competition as well as several state reviews.
  • Dates have been set for the first public forum in relation to AER’s review of the Rate of Return Guideline (18 September 2017 in Sydney).
  • AER released its draft incentive scheme for demand management (and the innovation allowance).
  • For networks - draft amendments to the RIT-T and RIT-D have been published for consultation.
  • As we head into the next round of resets, the AER announced a joint initiative with Energy Networks Australia and the Energy Consumer Australia to improve engagement and scope for innovation.
  • Framed as an attempt to encourage contestability behind the meter, a draft rule change was issued by AEMC to prevent DNSPs from earning regulated returns on any assets behind the connection point.
  • As part of wrestling with the greater use of distributed generation and changes in the generation mix, the AEMC has released an approach paper considering future approaches to coordinating transmission investment and generation – including new models for transmission charging and access arrangements.
  • The AEMC commenced or continued a number of processes around reliability – including where AEMO can declare lack of reserve conditions and a general review of how the framework needs to evolve to support reliability in light of the change in mix and increase in demand management.
  • At a state level, the final report from the Victorian Retail Energy Review, headed by former premier John Thwaites.  The headline finding was a recommendation that a regulated basic service tariff be re-introduced. 
  • Version 96 of the Rules was released. 

While it just missed the cut off for this update – the Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017 also passed the House of Representatives on 5 September.  The end of merits review.

 

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