A huge amount of media and public commentary over the last month has been devoted to the National Energy Guarantee. However, the importance of this policy should not distract from a whole range of other possible regulatory changes, including several consultations relating to different aspects of reliability in the National Energy Market. We summarise April’s regulatory and policy announcements below.
By Dr Drew Donnelly, Compliance Quarter.
National Policy and Funding
By far the most significant piece of energy policy released in the last month was the release and approval of the high-level design for the National Energy Guarantee (NEG).[1]Perhaps the most significant element of the NEG to be specified is that retailers will be required to meet the reliability obligation through their hedge contracting. It is expected that there will be further consultation (this time on the detailed design of the NEG) from May to July 2018 before confirming the final policy.
While not energy policy per se, the release of the Commonwealth Government’s proposals for Data Use and Availability will have a significant impact on the energy industry.[2] The new Consumer Data Right will initially be applied in the banking, telecommunications and energy sectors and will require energy businesses to provide customers with transaction and use data. The precise scope of that data is yet to be determined.
On 11 April the Australian Renewable Energy Agency (ARENA) announced $1.19 million in funding to the University of Queensland for the development of a network analysis tool aimed at supporting network businesses in connecting solar to the grid.[3]
Also on April 11, the Security of Critical Infrastructure Act 2018 was officially passed into law. Among other things, this Act introduces a wide-ranging power for the Commonwealth Government to direct that operators of certain critical infrastructure assets (which can include energy assets) act in certain ways.[4]
On 20 April the Australian Competition & Consumer Commission (ACCC) released its 2018 Gas Inquiry Interim Report looking at the efficient operation of the gas market including price disparities in gas supply between the southern states and Queensland.[5]
A major report developed by Geoscience Australia (in collaboration with other federal agencies), the Australian Energy Resources Assessment (AERA), was released. This report provides a snapshot of Australia’s energy resources and the demand for them in both domestic and international energy markets. In the forward to the report it is noted that Australia is “under-explored for oil and gas, and there is great potential for more to be found”, with the Minister adding, “The Australian Government remains committed to continuing oil and gas resource exploration and development to ensure plentiful, reliable energy supply for generations to come”.[6]
This contrasts with the major energy policy announcement this month from across the Tasman. with New Zealand’s Government banning future oil and gas exploration. This is intended to move New Zealand closer to a goal of a 100 per cent renewable energy by 2035 and net zero carbon emissions economy by 2050 [7]
Regulator Announcements and Consultations
In April, the Australian Energy Regulator (AER) released the following:[8]
- a Draft Position Paper on Measures of Profitability for Regulated Electricity and Gas Businesses. These profitability measures enable the public and stakeholders to compare returns of different network businesses and might inform submissions on regulatory determinations. Submission on the paper close on 30 May 2018 and a public forum is being held in Sydney on 16 May;
- The Revised Retail Pricing Information Guidelines and accompanying Notice of Final Instrument;[9]
- Draft Benefit Change Notice Guidelines setting out proposed requirements for notifying when a benefit under a market retail contract is changing or ending. Submissions close 21 May;
- A consultation paper on a proposed Transmission Annual Planning Report Guideline. This would set out the information that transmission businesses must publish to enable effective network planning decisions. Submissions close on 18 May 2018;
- Revised AER (Retail Law) Performance Reporting Procedures and Guidelines (Guidelines). These set out how regulated entities must submit information and data to the AER relating to their performance under the National Energy Retail Law and National Energy Retail Rules.
The Essential Services Commission of South Australia (ESCOSA) is consulting on proposed amendments to the Electricity Transmission Code.[10] Proposed changes include applying reliability standards to negotiated transmissions services such as grid-scale batteries. Submissions close on 2 June 2018.
Proposed Rule Changes and Associated Reviews
The Australian Energy Market Commission (AEMC) announced the following in April:[11]
- The final report of the Reliability Panel Four-Yearly Review was released finding that current reliability standard and settings are appropriate;
- A rule change request that would require retailers to give customers advance notice of any price increases on their energy bills. A consultation paper has been released with submissions due by 24 May;
- The Biennial Review of Gas Market Liquidity. Submission are also due by 24 May;
- A consultation paper on a rule change request to extend the timeframe for contracting emergency electricity reserves under the reliability and emergency reserve trader (RERT) scheme. Submissions on the consultation paper are due by 24 May.
- A Directions paper on the Reliability Frameworks Review. This seeks feedback on improving demand forecasting and enacts ‘Finkel Report’ recommendations relating to demand response, day-ahead information and designing a strategic reserve. Submissions are due by 18 May.
- A consultation paper on a proposed rule change to improve the Transparency and Consistency of Information AEMO provides to signal whether supply is projected to meet demand in the medium-term. Submissions are due by 10 May.
- A discussion paper on coordination of generation and transmission investment. This seeks public submissions on the best model for Renewable Energy Zones. Submissions are due 18 May.
If you think we could be of any help in updating your compliance program for new laws, rules and guidelines, please get in touch with us.
[1] www.coagenergycouncil.gov.au/publications/energy-security-board-update.
[2] For more information see https://www.compliancequarter.com.au/government-confirms-new-framework-for-data-availability-and-use/.
[3] See https://arena.gov.au/news/increasing-renewable-energy-back-grid/.
[4] For further information on this new law see https://www.compliancequarter.com.au/new-restrictions-foreign-investment-energy-infrastructure/.
[5] For more information see //www.compliancequarter.com.au/accc-gas-inquiry-april-2018-interim-report/.
[6] See http://aera.ga.gov.au/.
[7] Note, existing exploration and mining permits will continue to be honoured. See https://www.beehive.govt.nz/release/planning-future-no-new-offshore-oil-and-gas-exploration-permits.
[8] For details of these announcements and consultations see https://www.aer.gov.au/news.
[9] Read more at https://www.compliancequarter.com.au/important-changes-to-retail-pricing-information-guidelines/.
[10] See https://www.escosa.sa.gov.au/news/electricity-news/e-tcr-draft.
[11] For details see https://www.aemc.gov.au/news-centre/media-releases.
