Market Review: Open

Overview

The Australian Energy Market Commission (AEMC) has published a directions paper as part of the contestability workstream of the Transmission planning and investment review as at 24 November 2022.
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The Australian Energy Market Commission (AEMC) has published a directions paper as part of the contestability workstream of the Transmission planning and investment review as at 24 November 2022.

The Commission would like to acknowledge and thank stakeholders for their input and feedback to the contestability workstream of the Review to date. 

The Commission has placed the contestability workstream of the Review on hold while work continues on Stage 3 of the Review and progressing Stage 2 and 3 reforms via any rule changes received. 

The Commission will continue to monitor developments in the implementation of jurisdictional contestability regimes in New South Wales and Victoria, and overseas regimes, to understand and capture useful insights and information. 

The Stage 2 Final report was published on 27 October 

The final recommendations in Stage 2 are designed to help manage uncertainty in the near-term to support the timely and efficient delivery of major transmission projects. 

These recommendations seek to address uncertainty in 4 key areas of transmission planning that have identified by stakeholders:

  • financeability
  • social licence
  • cost recovery of planning activities
  • feedback loop

It is anticipated that these recommendations may be fully implemented by mid- to late-2023. The AEMC has provided proposed rules to form a basis for the processes to follow. The AEMC is strongly supportive of the expeditious implementation of these reforms.

The AEMC held virtual public forums on the Stage 2 Final report and the Stage 3 Draft report

The presentations from these forums can be found below. 

The issues to be addressed in the Review have been separated into Stages given the range and complexity of issues

The Review looks at multiple issues relating to the planning and delivery of transmission infrastructure. Many of these issues are complex and interlinked, but all go to the overarching objective of obtaining the right balance between time and efficiency to support the transition to net zero. 

Work is being delivered in stages. This recognises that some issues can be addressed more quickly, while others may require more significant work due to their inherent complexity. These stages are:

Stage 2 – near-term reforms: This stage focused on both reducing uncertainty and near-term solutions, including recommendations to address any foreseeable financeability issues which may arise.

Stage 3 – longer-term reforms: This stage focuses on issues that are of considerable complexity and/or are longer-term reforms. The key area of focus for Stage 3 is ensuring the economic assessment process facilitates the timely delivery of major projects.

Contestability workstream: This workstream focuses on examining whether contestability in the provision of transmission services could be a proportionate approach to the existing regulation of transmission projects. 

Key milestones

The upcoming key milestones are:

  • Stage 3 final report – March 2023

Background

Australia is undergoing a transformational shift to net zero. 

There is broad consensus that transmission is a critical enabler for the transition to net zero, both in the national electricity market (NEM) and for the economy more broadly. This transition will require an unprecedented level of investment in, and build of, transmission infrastructure to deliver power from renewable generation and energy storage to consumers, and to deliver it quickly.

The scale of transmission investment required, coupled with the speed of the energy transition, presents unique opportunities and challenges for the existing regulatory framework.

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Documentation

CONTESTABILITY - DIRECTIONS PAPER

AEMC documents