Overview

The AEMC conducted a review of the Gas Supply Guarantee at the request of Energy Ministers.

The review considered whether the Gas Supply Guarantee should continue in either its current or an amended form.

Final report

On 4 November 2021the AEMC published a final report for the Review of the Gas Supply Guarantee.

The final report recommends:

• the Australian Government extend the term of the Gas Supply Guarantee another three years to March 2026
• that an assessment on the long term need for the Gas Supply Guarantee be carried out prior to the conclusion of this extended period
• that the definition of gas supply shortfall be amended to clarify that a shortfall is considered in the context of part of a NEM region rather than the NEM as a whole. 

This final recommendation has been made on balance following consideration of a number of alternative views from stakeholders as well as the short to medium term outlook for the east coast energy market. 

It is prudent under the current changing circumstances that the Australian Energy Market Operator (AEMO) and market participants be able to access a tool such as the Gas Supply Guarantee that could assist them in managing potential gas supply shortfalls faced by gas-powered generators.

The AEMC is satisfied that continuation of the current arrangements for another three years is likely to be consistent with the long-term interests of electricity and gas consumers. This recommendation is consistent with that set out in the draft report.

The AEMC anticipates that a review of the Gas Supply Guarantee in three years will indicate whether the transformation of the energy sector still requires a mechanism of this nature or if the risks to supplying gas-powered generators have changed such that the Gas Supply Guarantee is no longer needed.

Consultation process

On 11 March 2021 the AEMC published a consultation paper which sought stakeholder input on whether a mechanism is still required, and if so, whether it should be in its current, or another, form. The Commission received 11 submissions, which can be found below.

The AEMC also held over 25 meetings with stakeholders during the initial consultation phase and worked collaboratively with AEMO.

The draft report for this review was published on 29 July 2021. The AEMC received nine submissions in response to its draft report, which can also be found below. In addition, AEMC staff held six meetings with stakeholders. 

Background

On 9 September 2020, the Energy Ministers provided the AEMC with terms of reference to conduct a review of the Gas Supply Guarantee.

Under the terms of reference from the energy ministers, the AEMC will carry out the review during 2021 and report back to the ministers in the first quarter of 2022.