Final determination

On 7 December 2023, the Australian Energy Market Commission (AEMC) made a more preferable final rule to amend the market price settings in the NEM for the period 1 July 2025 to 30 June 2028. The Commission has made a final rule which is the same as the draft rule published on 14 September 2023.

The market price settings in the NEM include the market price
cap (MPC) and cumulative price threshold (CPT), and the administered price cap (APC) which together define the limits for NEM wholesale market price outcomes.    

The more preferable final rule: 

• sets the MPC and CPT at the level recommended by the Reliability Panel (Panel) in the 2022 Reliability Standard and Settings Review (RSS Review) adjusted for inflation. 
• sets the APC at $600/MWh, which is different from the Panel’s recommendation of $500/MWh but consistent with its current value.

The Commission made this final rule as the existing market price settings were too low to support the supply of electricity when we need it most, during times:

• when there is a shortage of supply to meet demand, in the case of the MPC and CPT
• of extended very high prices, in the case of the APC.

The final rule works with other mechanisms to support the energy transition, including the Commonwealth Government’s Capacity Investment Scheme and state-based jurisdictional schemes, to deliver the mix of power system resources required to keep the electricity system reliable for households and businesses as we transition to net zero.

Overview

On 16 November 2022, the AEMC received a rule change request from the Reliability Panel (Panel) to change the market price settings to the levels recommended in the 2022 Reliability Standard and Settings Review (RSS review).

The Panel is tasked with reviewing and recommending the market price settings every four years, with any recommended changes then being considered by the AEMC in a rule change.  The Panel’s 2022 RSS review identified the existing market price settings as too low to support efficient levels of investment needed to maintain reliability as the NEM transitioned to net zero.  

To address this identified shortfall, the Panel’s rule change request proposed an increase to the MPC, CPT and APC for the period 1 July 2025 to 30 June 2028.

The Panel’s 2022 RSS Review was completed in September 2022 and involved significant stakeholder engagement and detailed quantitative analysis. The Commission's consideration of this rule change is part of a broader program of work on the reliability framework being completed by the AEMC, other market bodies, and jurisdictions.

Consultation paper and draft determination

On 11 May 2023, the AEMC published a consultation paper seeking feedback on the Panel’s proposed rule change. Submissions closed on 22 June 2023.

On 14 September 2023, the AEMC published a draft determination on the Panel’s proposed rule change.  Submissions on the draft determination closed on 26 October 2023.

All submissions are published on this page.