On 12 December 2024, the Australian Energy Market Commission (AEMC) published a final report for the Review into electricity compensation frameworks . It contains several recommendations to improve the directions, market suspension, and administered pricing electricity compensation frameworks in the National Energy Rules (the NER).

The AEMC self-initiated this Review on 2 November 2023, following the disruptive market events of June 2022 that highlighted areas in need of improvement within the compensation frameworks.

The Commission’s final recommendations are to amend the NER to improve the methodological, administrative, governance and objectives components for each of the electricity compensation frameworks. We have recommended:

• specifying a separate objective for the directions compensation framework
• allowing opportunity costs in each compensation category 
• improving the method for calculating directions compensation
• nominating AEMO to receive all compensation claims and assess them together with the independent expert
• improving administrative rules and timelines and clarifying obligations on claimants.

The final recommendations aim to improve the collective functioning of these frameworks to provide market participants with greater confidence to ensure electricity supply during market disruptions, thereby promoting reliable electricity services for consumers in accordance with the National Electricity Objective (NEO).

In developing the final recommendations, the Commission also took into account the recent increase to the administered price cap (APC) from $300/MWh to $600/MWh for the period from 1 July 2025 to 30 June 2028. The increase in the APC should facilitate market participation during times of extended high input costs, reducing the need for AEMO intervention and the risk of outages for consumers.

The recommendations in this Review have undergone rigorous consultation with stakeholders including through both our draft report and consultation paper. The recommendations have also been informed by submissions to our Improving security frameworks for the energy transition rule change.

The Commission's view is that the final recommendations to amend the NER could be implemented through a fast-tracked rule change so that there can be timely delivery of these improvements.