Rule Change: Completed
Overview
On 12 December 2024, we made a more preferable final rule in response to a rule change request submitted by GloBird Energy on 6 December 2023. The final rule shortens the national electricity market (NEM) settlement cycle to nine business days following the end of a billing period and introduces a new revision 20 business days following the end of the billing period.
The final rule will commence at the start of billing week 32 on 9 August 2026. This will allow the Australian Energy Market Operator (AEMO) sufficient time to consult with interested parties to review and update relevant procedures and guidelines relating to the settlement, prudential and metering data processes. AEMO will also be required to publish its transition plan.
The final determination and rule were informed by the 16 stakeholder submissions we received in response to the draft determination and AEMO's high-level implementation assessment.
We consider that shortening the settlement cycle would reduce working capital requirements for market participants by:
- lowering the quantum of credit support that market participants must lodge with AEMO as part of the prudential regime
- shortening the settlement cycle for certain financial contracts, which would reduce the quantum of working capital that market participants may need to hold to respond to Call Notices from AEMO.
Lowering working capital requirements for market participants, including retailers, would support increased investment in service innovation, lower barriers to retail electricity market entry, and reduce the risk of retailer failure.
The AEMC considers that this, in turn, would have material benefits for consumers through access to lower prices, better service offers, more choice, more competitive pressure on retail prices, and less customer disruption resulting from retailer failure.