The Australian Energy Market Commission (AEMC) has made a more preferable final rule to improve the operation of the feedback loop process, emphasising its role as a consumer safeguard, and supporting the efficient delivery of major transmission projects in Australia.
The decision is set out in a final determination published today, following a rule change request from The Hon Chris Bowen MP, Minister for Climate Change and Energy.
The AEMC sets the rules for the National Electricity Market (NEM) and provides independent expert energy advice to Australia’s State and Federal Governments. It is strongly focused on providing a transparent regulatory framework to ensure the long term interests of consumers, particularly in light of current cost of living concerns.
An essential part of the AEMC’s work involves reviewing whether there are more efficient processes that can be implemented to benefit consumers such as improved reliability outcomes and reduced risk of higher costs if major transmission projects are not delivered on time.
To enable those benefits, the AEMC has today made a final rule that clarifies the required inputs and timing for conducting feedback loop assessments by the Australian Energy Market Operator (AEMO).
Chair Anna Collyer says the rule addresses workability issues that were undermining the feedback loop’s role as an important consumer safeguard.
“Getting the right regulatory settings around this process is critical to protecting the long term interests of consumers as our energy system undergoes a once in a century transformation.
“The improvements made by this final rule will help the feedback loop operate efficiently and transparently. This will maintain a robust assessment focused on the long term interests of consumers while promoting the timely delivery of major transmission projects.” she said.
Under the National Electricity Rules, major transmission projects are assessed by AEMO through the feedback loop before a business seeks regulatory approval and funding from the AER to proceed with construction.
Under the improved process:
- AEMO is able to assess feedback loop requests using the latest modelling assumptions
- The Australian Energy Regulator (AER) must provide guidance on when transmission businesses should request a feedback loop assessment
- AEMO must complete assessments within 40 business days, with extensions possible for complex projects
- Assessments and contingent project applications can run concurrently where suitable.
Anna Collyer said extensive consultation and stakeholder input shaped the final determination, including through the AEMC’s recent Transmission Planning and Investment Review.
“There was broad support across market bodies and transmission network service providers for addressing issues with the feedback loop. Some proposed alternative solutions but we consider the final rule is more preferable and in the long term interests of consumers.
“It enhances the feedback loop’s role as an effective consumer safeguard while supporting timely delivery of actionable projects under the Integrated System Plan. Importantly, these refinements streamline the process without diminishing key consumer protections,” she said.
Transitional provisions apply, including giving the AER up to 12 months to update its Cost Benefit Analysis guidelines to incorporate the final rule changes.
The final rule commences on 14 March, 2024.
View the project page for more information and contact details.
Media: Jessica Rich, 0459 918 964, media@aemc.gov.au.