On 15 December 2022, the AEMC made a final rule that will enable the Victorian gas market operator to better manage the risk of curtailment for gas users during the tight demand-supply conditions expected from 2023 to 2025.

The final rule came into effect on 15 December 2022.

Final rule determination

The final rule amends the NGR to:

• require the Australian Energy Market Operator (AEMO) to act as both buyer and supplier of last resort in relation to the Dandenong liquefied natural gas (LNG) storage facility over 2023-2025
• set out the contractual, cost recovery, proceeds distribution, accountability and transparency arrangements that will apply to the buyer and supplier of last resort roles over this period.

The Commission is satisfied that the final rule will or is likely to, contribute to the achievement of the national gas objective by improving the safety, security and reliability of the supply of gas to Victorian consumers through:

• enabling the Dandenong LNG facility to be used more efficiently
• supporting the efficient operation of the DWGM.

Background

On 8 August 2022, the AEMC received a rule change request from the Victorian Minister for Energy, Environment and Climate Action to amend Part 19 of the NGR, which covers the Victorian DWGM. 

The rule change request is a priority action agreed to by Energy Ministers. It is intended to enable AEMO to manage peak day supply shortfalls in Victoria more effectively over 2023-2025 by allowing it to act as buyer and supplier of last resort for the Dandenong LNG facility.

A copy of the rule change request is available below, along with the proposed rule.

Treatment as an urgent rule change request

The Commission considered that this rule change request was a request for an urgent rule and therefore has decided to use the expedited rule change process. 

Objections to using the expedited rule change process

Under section 304(3) of the National Gas Law (NGL), the AEMC must not make a rule in accordance with the expedited process if the AEMC receives a written request not to do so, and the reasons set out in the request are not, in its opinion, misconceived or lacking in substance.

On 15 September 2022, the Commission received one objection to not using an expedited process. The Commission considered the reasons outlined in the objections submitted and decided that the reasons provided in the requests were misconceived or lacking in substance.

The objection has been published below, along with the Commission’s reasons.

Consultation process

On 1 September 2022, the AEMC published a consultation paper on the rule change request. We received 11 submissions, which can be found below.

The AEMC also held a stakeholder information session on 2 September 2022 that provided an overview of the issues discussed in the consultation paper. The material presented can be found below.

On 28 October 2022, the AEMC held another stakeholder workshop to provide an overview of the draft policy positions and get feedback from stakeholders on the proposed changes. The material presented at this workshop is also available below.

Extensions

On 1 September 2022, the Commission extended (at initiation) the timeframe to make a final determination to 24 November 2022 under section 317 of the NGL. This extension was made to allow the Commission sufficient time to make any necessary changes to the rules once submissions were received and carry out additional stakeholder engagement, which was expected to be necessary given the nature of the request.

On 27 October 2022, the Commission extended the date for making the final rule determination under section 317 of the National Gas Law (NGL). This extension was made to allow the Commission more time to investigate concerns raised by stakeholders about key elements of the proposed rule and identify potential solutions in consultation with AEMO and stakeholders.