Guidance Notes: Roles of the AER and AEMO under the capacity trading reform package

Date: 
Friday, 03rd August 2018

On 29 June 2018, the COAG Energy Council agreed to implement the legal and regulatory framework required to give effect to the final design of the capacity trading reform package. This legal and regulatory framework comprises:

  • amendments to the National Gas Law (NGL), the regulations made under the NGL (Regulations) and the National Gas Rules (NGR); and
  • the introduction of a new regulatory instrument, the Operational Transportation Service Code (Code).

Consistent with the approach that is usually employed when changes of this nature are made to the legal and regulatory framework, the final versions of the NGL, Regulations, NGR and Code will only be published once they are made. The changes to the NGL were tabled in the South Australian Parliament on 2 August 2018. Following the proclamation of these changes, the required amendments to the Regulations and NGR, and the initial Code will be made, which is currently expected to occur in November 2018.

To provide stakeholders with some guidance in the intervening period, the Gas Market Reform Group (GMRG) has published the following:

  • Guidance Note: Australia Energy Regulator’s (AER) role under the capacity trading reform package, which provides further detail on the functions and powers that the AER will have under the reform package (including in relation to the exemptions framework and the classification of transitional firm services) and the matters to be dealt with in guidelines the AER is required to prepare.
  • Guidance Note: Australian Energy Market Operator’s (AEMO) role under the capacity trading reform package, which provides further detail on a number of the functions and powers that AEMO will have under the reform package, the registration framework, participation fees and the matters to be dealt with in the procedures AEMO is required to prepare.

The Guidance Notes are intended to assist AEMO, the AER and market participants with market readiness activities that are expected to be carried out before or shortly after the final legal and regulatory instruments will be published.

The Guidance Notes should be read in conjunction with the Information Paper: Capacity trading reform package legal and regulatory instruments, which sets out the final design of the reform package and key dates for various obligations that AEMO, the AER and market participants will be subject to.

Further guidance on the reform package will be made available on the AEMO website over the coming months.

Background

The capacity trading reform package was originally recommended by the Australian Energy Market Commission (AEMC) in its Eastern Australian Wholesale Gas Market and Pipelines Framework Review and endorsed by the COAG Energy Council at its August 2016 meeting. In the latter half of 2016 the GMRG was accorded responsibility for leading the design and development of this reform package.

The GMRG’s final design recommendations on the capacity trading reform package were endorsed by the Energy Council in November 2017 / January 2018. The Energy Council agreed at its 24 November 2017 meeting, that the capacity trading reform package should be implemented by 1 March 2019 and the harmonisation of gas day start times and nomination cut-off times should occur by 1 October 2019.

On 19 March 2018, the GMRG released the draft legal and regulatory instruments required to implement the capacity trading reform package for consultation and invited stakeholders to provide feedback by Friday 27 April 2018. The consultation paper and submissions received are available on the Capacity Trading Reform Package Legal and Regulatory Framework – Consultation paper page. On 29 June 2018, the COAG Energy Council agreed to implement the legal and regulatory framework required to give effect to the final design of the capacity trading reform package.