The Australian Energy Market Commission (AEMC) has made a more preferable final rule that requires the Panel to undertake the review of the reliability standard and settings and provide its final report to the AEMC by 1 September 2022. The more preferable rule, given the extension of time, provides that the 2022 reliability standard and settings review (2022 RSS Review) will be for the period of 1 July 2025 to 30 June 2028.

Background

On 13 October 2021, the AEMC received a rule change request from Dr Kerry Schott AO, Chair, Energy Security Board (ESB) to amend the National Electricity Rules requirements on the Reliability Panel (Panel) for the 2022 reliability standard and settings review (2022 RSS review).

Dr Schott’s proposed rule sought to:

• Reduce the scope of the 2022 RSS review by removing the need for the Panel to undertake the review of the reliability settings in that review. The Panel would therefore only review and report on the reliability standard (standard).
• Extend the date of the Panel’s 2022 review and publication of the final report of the standard from 30 April to 30 June 2022.

The objective of the proposed changes was to align the requirements to design a capacity mechanism with the need to consider the optimal reliability settings required for a transitioning power system. In addition, the request provides the Panel with adequate to time consider the outcomes of the ESB final advice and recommendations in its review of the reliability standard. 
 

Commencement of rule change process

On 28 October 2021, the Commission published a notice under ss. 95 and 96 of the National Electricity Law (NEL) advising of its intention to commence the rule making process and the first round of consultation in respect of the rule change request. 

The notice further advised stakeholders of the AEMC's intention to subject the rule change request to the expedited rule making process under s. 96 of the NEL on the basis of it being a 'non-controversial rule', as defined under s. 87 of the NEL.  

A consultation paper prepared by the AEMC identifying specific issues and questions for consultation was also published with the rule change request. Submissions closed on 25 November 2021.

Twelve submissions on the rule change request were received as part of the first round of consultation and are available below.

Draft determination

A draft determination was prepared by the AEMC proposing a more preferable draft rule on 23 December 2021. The draft determination outlined the AEMC’s more preferable rule and decision for the Reliability Panel to:

• review both the reliability standard and settings in the 2022 RSS Review, not just the standard as was proposed
• provide its final report of the 2022 RSS Review to the AEMC by 30 August 2022, instead of 30 June 2022, and
• Given the time for the final report, exclude the financial year 2024 from the 2022 RSS Review. The Panel is therefore required to consider the reliability standard and settings of an energy-only market to apply for 1 July 2025 to 30 June 2028.

Submissions closed 3 February 2022. 4 submissions on the more preferable draft determination and draft rule were received as part of the second round of consultation. These are available below.

Update on rule making process

Under section 96(3) of the NEL, 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. 

Five objections were received in relation to the rule change request proceeding through the expedited process as a non-controversial rule.

The Commission considered the reasons outlined in the five objections submitted and came to a view that some of the reasons provided in the objections were not misconceived or lacking in substance. Consequently, the rule change request will proceed through a standard rule making process, rather than through an expedited process. 

On 2 December 2021, a notice advising of this decision was published.