Market Review: Open

Overview

In August 2021, Energy Ministers tasked the AEMC with a review of the National Gas Rules (NGR) and National Energy Retail Rules (NERR) to develop initial rules that will extend the regulatory frameworks to include low-level hydrogen blends and renewable gases. 
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Review into extending the regulatory frameworks to hydrogen and renewable gases 

Overview

In August 2021, Energy Ministers tasked the AEMC with a review of the National Gas Rules (NGR) and National Energy Retail Rules (NERR) to develop initial rules that will extend the regulatory frameworks to include low-level hydrogen blends and renewable gases.   

Purpose and approach of the review

The purpose of the AEMC's review is to:

  1. Identify potential issues in the NGR and NERR that could emerge if natural gas equivalents are permitted to be supplied through natural gas distribution pipelines.
  2. Develop draft initial rules to address these issues through a consultative process.
  3. Inform jurisdictional officials of any National Gas Law (NGL) and National Energy Retail Law (NERL) changes that the AEMC considers should be made to achieve the objective of the Energy Ministers. 

The AEMC has also been asked to prioritise the changes that need to be made, and whether any amendments could be deferred. This prioritisation advice will assist the Energy Ministers in meeting the expedited time frame that has been set for these reforms.

The AEMC is also concurrently undertaking a rule change process focused on including distribution connected facilities in the Victorian declared wholesale gas market (DWGM). More information on the rule change can be found on the project page at: https://www.aemc.gov.au/rule-changes/dwgm-distribution-connected-facilities.

The draft report

On 31 March 2022 the Commission published a draft report for consultation. This report sets out the Commission’s draft recommendations for changes to the NGR and NERR that would support their extension to other covered gases, and natural gas equivalents supplied to consumers.  

Key recommendations from the report are:

  • Extending the economic regulatory framework
  • Extending the market transparency mechanisms 
  • Streamlining arrangements for the short term trading markets (STTM)
  • Adapting the Victorian declared wholesale gas market (DWGM)
  •  Allowing new services to be priced or traded within the retail gas markets 
  • Enabling consumers to be informed about the transition to natural gas equivalents 
  • Retaining the draft regulatory sandbox rules in their current form, as these draft rules can already accommodate other covered gases 

In addition to these recommendations the AER suggested that changes be made to:

  • the exemption framework for minimum ring fencing requirements;
  • the regulator’s power to impose additional ring fencing requirements;
  • and the associate contract approval process. 

The Commission has set out the AER’s suggestions in this draft report for consultation.

Next steps 

A stakeholder forum will be held on Friday 1 April 2022 from 1pm (AEST). To register your interest in attending, email renewablegas@industry.gov.au.  

Submissions to the draft report are due by COB Thursday 19 May 2022.    

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