The AEMC today called for public comment on options for mitigating the financial risks that could be caused by the failure of a large electricity retailer – with submissions due on 20 December 2012.

The options paper that the AEMC published today is part of its advice on the resilience of financial relationships in the National Electricity Market (NEM). This project started in June this year and will provide advice to energy ministers on risks arising from the financial interdependencies between electricity market participants and the impacts of those risks for consumers.

This advice is not about individual energy market participants. Its focus is to ensure that the financial relationships and markets underpinning the efficient operation of the NEM are sufficiently robust to manage the financial consequences of unexpected events.

The likelihood of a large energy retailer’s failure is low – but consequences could be severe. It is therefore appropriate to explore the current market arrangements and examine options to manage the impacts on other energy businesses and consumers that could arise from a large retailer failure.

The options paper sets out a range of potential options for mitigating the risks that could be caused by a large retailer failure. The AEMC will consider submissions on the options before making recommendations about which, if any, of the options should be implemented.

The options paper will be followed by an interim report in early 2013. That report will set out our draft advice to SCER on the risks associated with the financial distress of a large retailer and any recommendations for new mechanisms to mitigate those risks in the long term interests of consumers.

For information contact:

AEMC Chairman, John Pierce (02) 8296 7800

AEMC Project Leader, Richard Owens (02) 8296 7800

Media: Communication Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817