Today, the Chairman of the Australian Energy Market Commission (AEMC), Dr John Tamblyn, announced the Review of electricity and gas market frameworks in the light of new climate change policies. The Ministerial Council on Energy has provided the Terms of Reference to the AEMC.

The Review is to focus on assessing how the introduction of the Carbon Pollution Reduction Scheme (CPRS) and the expanded Renewable Energy Target may affect Australia's energy market frameworks and determine what, if any amendments are needed to those frameworks
as a result.

"Energy markets in Australia are well designed and functioning to internationally respected standards of efficiency", Dr Tamblyn said.

"AEMC decision making is guided by the objectives set by the National Electricity Law (NEL) and the National Gas Law (NGL). Reviews conducted by the AEMC must have regard to these objectives which are to promote efficient investment in, and efficient use of, electricity and natural gas services for the long-term interests of consumers with respect to price, quality, reliability and security of supply.

"The outcomes of the Review will provide advice to the MCE on adjustments that may be necessary to the energy market frameworks so that the objectives of the NEL and NGL can continue to be met," Dr Tamblyn said.

Dr Tamblyn noted that the planned introduction by the Australian Government of the CPRS and expanded national target for renewable generation will influence a wide range of economic activity.

"It is timely in advance of these new policies being implemented, to review whether the frameworks need to be amended to ensure that energy markets continue to operate efficiently and reliably in the interests of consumers because of the changed commercial incentives and behaviour these policies will create.

"We welcome the Ministers' request for advice on this matter and look forward to engaging with our stakeholders on these important issues," he said.
The Review is scheduled to provide its final report to Ministers in September 2009.

Consultation papers will call for public submissions at key points throughout the Review process:

The Ministerial Council on Energy has asked the AEMC to establish a stakeholder Advisory Committee comprising of energy market operators and planners, regulators, industry and energy end user groups. More information on the Advisory Committee will be posted once the membership is finalised.