The Rule as made created Chapter 2A to contain all matters relating to the new process for region change in the Rules. It introduced an application-initiated process to change regions in situations where there is a material and enduring congestion problem. Under the new process, an intending applicant will need to identify a congestion problem and offer an economically-based and forward-looking solution that promotes economic efficiency in the NEM. The process also formally provides for any interested party to propose alternative solutions.

Background

The Commission received a Rule proposal on 5 October 2005 from the Ministerial Council for Energy (MCE) regarding region boundaries in the NEM.

On 12 January 2006, the Commission published a notice under section 95 of the National Electricity Law (NEL) commencing initial consultation on the Region Boundaries Rule proposal. Submissions were due by 10 March 2006.

The Commission concurrently considered five Rule change proposals and one reference for Review that related to various aspects of network congestion management in the NEM. It was essential for this work to be co-ordinated by the Commission in order to deliver a comprehensive “Congestion Management Regime” for the market going forward. The Commission’s Congestion Management Program - Statement of Approach (PDF) provided information and clarity about the way in which the Commission would address the five congestion related Rule change proposals and the Congestion Management Review in an integrated manner.

Other Rule change proposals that relate to congestion management and region boundaries and the Review can be found at

• Southern Generators/NEMMCO proposal on Management of negative settlement residues in the Snowy Region
• Snowy Hydro Ltd proposal on Abolition of Snowy Region
• Macquarie Generation proposal on Alternative Snowy Region Boundary
• Snowy Hydro Ltd proposal on Management of negative settlement residues by re-orientation
• Congestion Management Review

On 4 May 2006, the Commission issued a notice in accordance with section 107 of the NEL, extending the period of time for it to publish a draft Rule determination in relation to this Rule proposal until the 30 November 2006.

On 9 November 2006, the Commission published a notice under section 107 of the NEL extending the publication date of the draft Rule determination on this Rule change proposal from 30 November 2006 to 14 December 2006. In its June 6 2006 “Congestion Management Program - Statement of Approach”, the Commission considered it was in the public interest to align its consideration of the Congestion Management Review and the other related proposals before it. Accordingly, this extension aligned the publication date of the draft Rule determination with the timelines set out in the Statement of Approach.

On 14 December 2006, the Commission published a notice under section 107 of the NEL extending the publication date of the draft Rule determination on this Rule change proposal from 15 December 2006 to 28 June 2007. The Commission has previously communicated that it considered it was in the public interest to align its consideration of this Rule change proposal and the Congestion Management Review. This extension aligned the release of this draft Rule determination with the revised timetable for the Congestion Management Review draft Report.

On 28 March 2007, the Commission released its updated schedule (PDF) for its work on congestion management. The updated schedule provided interested parties with an opportunity to consider the interrelated issues associated with the Congestion Management Review, the MCE regional boundaries Rule change proposal and the various Rule change proposals in relation to the Snowy region boundary in an integrated manner.

On 10 May 2007, the Commission published a notice under Section 107 of the NEL extending the period for publication of the draft Rule determination on the MCE’s Region Boundaries Rule change proposal from 28 June 2007 to 30 August 2007, for reasons conveyed in its March 2007 updated schedule (PDF).

On 29 June 2007, the Commission received a supplementary submission from NEMMCO responding to enquiries regarding technical criteria for a region boundary change.

On 30 August 2007, the Commission published a notice under section 107 of the NEL extending the period for publication of the draft Rule determination on the MCE Rule change proposal for a new process for Region Change. The period was extended from 30 August 2007 to 20 September 2007. The Commission pursued, where practicable, a comprehensive and integrated approach to considering issues related to managing congestion in the NEM, and was in the final stages of preparing the Draft Report on the Congestion Management Review. The Commission considered the postponement of the release of the draft determination and draft Rule for a new Process for Region Change provided interested parties with an opportunity to consider the related issues associated with the Congestion Management Review and this Rule change proposal together.

On 20 September 2007, the Commission published a notice of its decision under section 107 of the NEL to extend the period for the preparation of the draft determination on this proposal to 27 September 2007. The reasons for the Commission’s decision relate to the complexity of the matters under consideration and the need to comprehensively address these matters including the interrelationship of this proposal with the Congestion Management Review. It is on this basis that the Commission considered that it was in public interest to extend the time period for the making of the draft determination by one week.

On 27 September 2007, the Commission gave notice under section 99 of the NEL of the making of the draft Rule determination and draft Rule on the MCE Rule change proposal for a new process for region change. The Commission determined to make a Rule. The draft Rule would introduce an application-initiated process to change regions only when there is a material and enduring congestion problem. Submissions on the draft Rule determination and draft Rule closed on 9 November 2007.

On 6 December 2007, the Commission published a notice under section 107 of the NEL to extend the publication of the final Rule determination from 6 December 2007 to 20 December 2007. The Commission considered it was in the public interest to extend the publication of the final Rule determination in order to fully address the issues raised in submissions.

On 20 December 2007, the Commission gave notice under section 102 of the NEL of the publication of both the final Rule determination and the National Electricity Amendment (Process for Region Change) Rule 2007, No.11 for the Ministerial Council on Energy’s Process for region change Rule change proposal. The Commission also gave notice under section 103 of the NEL of the making of that Rule. The Rule as made commenced on 1 July 2008. This decision affirmed the Commission’s draft decision to incorporate in the National Electricity Rules a new process for region change.

The Rule as made created Chapter 2A to contain all matters relating to the new process for region change in the Rules. It introduced an application-initiated process to change regions in situations where there is a material and enduring congestion problem. Under the new process, an intending applicant will need to identify a congestion problem and offer an economically-based and forward-looking solution that promotes economic efficiency in the NEM. The process also formally provides for any interested party to propose alternative solutions. The commencement of the Rule on 1 July 2008 aligned with the abolition of the Snowy region.

Details of the Commission’s decision are set out in its final Rule determination.