On 14 April 2022, the Australian Energy Market Commission (AEMC) made a more preferable draft rule that amends the National Electricity Rules (NER) and made the Australian Energy Market Operator’s (AEMO) proposed change to the National Gas Rules (NGR).

Submissions to the draft determination and draft rules are due by 26 May 2022.

Draft rule

The changes to the rules promote good regulatory practice, greater transparency, and flexible, fit-for-purpose consultation on subordinate instruments.

Key elements of the draft electricity rule are:

• Two new fit-for-purpose consultation processes: one for non-material changes (the expedited process), and one for minor and administrative changes.
• Maintaining two rounds of consultation for the standard process and updated timeframes. This means that minimum consultation periods for stakeholders are now aligned (four weeks), and there is greater certainty of the timeframes for publication of the new draft and final instruments (a maximum of ten weeks). This will also allow decision-makers to undertake more flexible consultation.
• Consulting parties can choose, and stakeholders can request, to switch from the expedited to the standard process if complex issues arise, or stakeholders consider the proposed amendments may impact the NEM.
• Stakeholders may request meetings during any consultation period instead of requiring the request to be in written submissions and decision-makers are not required to hold meetings if they are not practicable.

The changes to the gas rules mean that instruments that previously consulted according to the extended consultative procedure will instead consult according to the standard consultative procedure. This change supports flexible, fit-for-purpose consultation, and good regulatory practice.

No changes have been proposed to the Retail consultation procedures in the National Energy Retail Rules (NERR).

Under the draft rule, the changes to the electricity and gas rules would commence on 14 July 2022. These changes would only apply to consultations where the first consultation document is published after this date. Any consultations already underway would be subject to the conditions under the existing rules.  

Consultation process

On 16 December 2021, the AEMC published a consultation paper on the rule change request. We received 24 submissions, which can be found below.

Background

The NER, the NGR and the NERR require many matters to be specified in guidelines, procedures, methodologies and reports (called ‘subordinate instruments’). The Australian Energy Regulator (AER), AEMO, the Reliability Panel and the Information Exchange Committee, amongst others, are responsible for developing and amending these documents.

The most common consultation process in the NER is the Rules consultation procedures, which require two rounds of consultation. These apply to approximately 70 different instruments. 

On 7 January 2021, AEMO submitted a rule change request that aimed to ensure that consultation processes on subordinate instruments were flexible and fit-for-purpose.

AEMO proposed simplifying the current consultation processes by aligning them with the Transmission and Distribution consultation procedures, which require one round of consultation. AEMO also proposed that the Extended Consultative Procedures under the NGR should be simplified. 

AEMO also provided a rule change addendum that proposed:

• The consultation criteria to be used by a decision-maker to determine whether additional consultation steps are appropriate, and the timing and form of those steps.
• That the decision-maker must publish a consultation plan at the outset, and review it, if necessary.
• Extending the scope of the rule change to the consultation processes used by the Reliability Panel.