The Australian Energy Market Commission (AEMC) has released its final report with 10 recommendations to improve the Retailer of Last Resort (RoLR) scheme, drawing on valuable insights gained by regulatory agencies, market participants, and governments during the energy crisis of 2022, which saw an unprecedented number of retailer failures.  

AEMC Chair Anna Collyer said the recommendations would simplify and improve both the RoLR scheme and the gas directions framework, providing market participants with greater certainty and clarity before, during, and after retailer failure events.  

‘’The recommendations focus on supporting more timely access to critical information in the event of retailer failures, reducing the cost of such failures for consumers and designated RoLRs, and improving incentives within the RoLR scheme.  

‘’These recommendations were informed and shaped through extensive stakeholder consultation over the past two years.  

''We believe they will enhance the RoLR scheme as an effective safety net, helping address the risks faced by retailers and consumers when a retailer fails, ultimately supporting better market outcomes and ongoing financial resilience in the retail market," Ms Collyer said. 

In the National Electricity Market’s (NEM) competitive retail market, high levels of entry and a dynamic spot market create the risk of retailer failures. As such, retailer failures are likely to occur over time, necessitating efficient and effective exit arrangements that ensure continuity of supply for impacted consumers while minimising costs and systemic risks. 

Most of the AEMC’s recommendations involve changes to the National Energy Retail Law (NERL), meaning they must be implemented by jurisdictions.  

‘’The AEMC welcomes the opportunity to work constructively with jurisdictions, to progress  these recommendations for implementation,’’ said Ms Collyer. 

Background: 

The RoLR scheme protects consumers by ensuring continuity of supply to a customer if their retailer fails. This framework is supported by a gas directions framework which allows the AER to direct gas supply in the event of a retailer failure. 

Between 2012 and 2022, the RoLR scheme had only been used four times, and the AER had never used its gas directions powers. Following the unprecedented number of retailer failures in mid-2022, Energy Ministers sought the AEMC’s expert advice on managing retailer failures and improving market resilience. 

A key recommendation supported by Energy Ministers was for the AEMC to initiate this Review to consider improvements to the RoLR scheme. Our final report and 10 recommendations deliver upon this work.  

View the project page for more information and contact details.  

Media: Jessica Rich, 0459 918 964, media@aemc.gov.au