Australian Energy Market Commission
Making Market Transformation Work
Overview 2016-2017
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The changing mix in generation sources means we have to manage the power system differently and evolve the market. There is no silver bullet. There are many options we could take. But we need to understand how different solutions would interact with the rest of the system; affecting prices, reliability and security. Decisions made today will affect national economic development for decades to come. The AEMC is changing the energy market design so it can deliver more reliable, secure capacity and help keep bills affordable. Our deep commitment to building an enduring, effective dialogue with our stakeholders is how we strive to make market transformation work in the long-term interests of consumers. Everything flows from the quality of those relationships and the quality of informed debate. We look to stakeholders to test our thinking and establish common understanding for the development of regulatory frameworks which can deliver the best value and security for families and businesses as the energy revolution unfolds. |
We are changing the energy market design |
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Giving consumers more choices
Every day we see new energy services in the market. Like smart phone apps to control appliances, incentives to cut waste by reducing demand at peak times, and commercial properties using built-in generators powered by local renewables. Our power of choice reforms are helping people monitor, manage and adjust the ways they use electricity.
Consumers driving market change
Our power of choice reform program is all about
- Better consumer information and tools so people can choose retail deals that suit them best.
- Opening the market to smarter metering and technology
- Poles and wires reform so price signals can show consumers where savings can be made and investors can see the true costs of providing power.
Consumer blueprint
The AEMC consumer blueprint is updated every year in our annual competition review – following the first one in 2013.
The most recent recommendations were made to industry and governments in July 2017.
Help people understand their usage and spending
Develop market-wide awareness to make energy shopping easier.
Improve information on cost savings, and expiry of benefits on contracts.
Help vulnerable customers move to competitive market offers and away from higher priced standing offers.
Distributors and retailers to streamline collection of consumption data so better pricing options can be provided.
Better comparison tools so it’s easier for consumers to choose the best deal for them
Improve and promote government comparison websites like energymadeeasy and victorianenergy saver; include more plain English fact sheets to simplify and standardise information.
COAG Energy Council of ministers to give additional support to those who need it
Improve awareness of energy concessions.
Look at how consumer protection frameworks need to evolve given increased diversity of new retailers and energy entrepreneurs in the market.
Harmonise government regulatory arrangements to reduce costs for retailers which operate nationally.
Read more about the AEMC’s work program to promote competitive energy services
Building better gas markets
It is more important than ever for the COAG Energy Council to achieve its vision of a liquid wholesale gas market, with an efficient and transparent reference price. Ministers have agreed to our proposals for two wholesale gas trading hubs, along with other measures to make it easier to buy and sell gas across the whole east coast.
Gas is a vital source of energy and system security
Natural gas accounts for around a quarter of Australian energy consumption. The pivotal role of gas in the economy is set to grow. Gas generators can quickly vary their output, helping to integrate wind and solar into the power system. They are both dispatchable and synchronous. So they can help maintain power system reliability and security even as coal generators exit the market.
Redesigning gas markets to strengthen the national economy
Read about our reforms to the east coast gas market
Building on this work, the AEMC is now reviewing the National Gas Rules to address concerns that customers may be paying more than necessary for gas pipelines. This work builds on last year’s major review by the ACCC into the competitiveness of wholesale gas prices, which found that regulated pipelines may be charging monopoly prices.
The AEMC will develop recommended actions and publish its findings in a draft report in February 2018.
Making it easier to buy and sell gas in Victoria
The next step towards a harmonised and well-functioning gas market was taken this year when the AEMC recommended trading improvements for Victorian gas.
When implemented, these changes will make it easier for buyers and sellers to manage risk and lower transaction costs; and improved gas trading between states will benefit everyone in the market.
These reforms could increase Australia’s GDP by a further $1.7 billion by 2040.
Keeping the lights on
The generation sector is changing with more renewables connecting and older thermal units retiring. This requires new ways of managing the stability of the power system.
Lowest cost security and reliability
Above all we want a secure and reliable power system that keeps prices as low as possible for consumers.
The generation mix of the power system is changing. The renewable energy target has encouraged more wind and solar to enter the market. At the same time coal generators are retiring and there’s more rooftop solar, microgeneration and battery storage.
Our priority work to address change includes
- Our reviews into system security and frequency control frameworks
- Gas market changes to support system security
- Our reliability frameworks review
- Reliability Panel work
- Advice on effective integration of energy and emissions reduction policy
- Our implementation of Finkel review recommendations
Priority work at a glance
Our system security review was initiated in July 2016 to address the technological revolution underway in the national power system. We made a new framework to help protect the power system from emergencies with ‘last line of defence’ mechanisms like controlled load shedding. We followed this up with reforms to guard against technical failures that lead to cascading blackouts. There are new rules for AEMO and networks to provide minimum levels of inertia and system strength. The frequency control frameworks review is looking at ways to integrate new technologies and demand response to boost security.
Integrating emissions policy
Australia’s energy future will be cleaner. Power will be provided by a mix of energy sources as we reduce emissions from the electricity sector. The design of any mechanism to achieve emissions reduction must be integrated with energy policy so structural change can happen while keeping the lights on and reining in consumer costs.
Features of well-integrated policy
Environmental policies that are appropriately designed and integrated can achieve their objectives while minimising costs for consumers. A well-integrated energy and emissions reduction policy has three features.
- Technology neutral to allow for the greatest number of technology options in the market so there can be increased competition between generation sources and downward pressure on costs
- Flexible enough to adapt to whatever supply and demand conditions the future might bring
- Sustainable and consistent so investors in all kinds of generation can be confident that policy objectives can be met.
Importance of the contract market
The contract market is the direct link between matching the financial incentives for generation assets investment with the physical needs of the system. Any mechanism for emissions reduction must enhance the role of the contract market to maintain reliability and security in the power system.
As existing generators retire, the volume of available hedging contracts have been falling. This combined with rising gas prices has increased the cost of doing business.
Submissions on integrating energy and emissions reduction policy
Towards the next generation: Delivering affordable, secure and lower emissions power
Select Committee on the state-wide electricity blackout and subsequent power outages
Independent review into the future security of the national electricity market
Inquiry into the retirement of coal fired power stations
Commonwealth request for advice on an emissions and reliability energy guarantee
Project landscape
To see all projects since our establishment in 2005 see annual reports on www.aemc.gov.au
Stronger incentives for transmission businesses to pursue efficient investments ERC0106
Enhancing future investment in transmission and generation EPR0019
Proposed national framework for distribution reliability targets EPR0031
Advice on costs and benefits of NSW electricity distribution reliability EPR0027
Reviewing generation’s ability to meet demand REL0049
Recommendations on reviewing unusual power system events REL0048
Annual market performance review of the power system for FY13
Giving consumers power of choice EPR0022
Lower cost ways to support electric and natural gas vehicles EMO0022
New obligations for networks to publish demand side engagement strategies ERC0131
New rules for AER to set efficient network costs ERC0134
Annual report on electricity price trends 2012
Reducing potential barriers to participation for small generators ERC0141
Improving the natural gas deviation pricing framework GRC0014
Role of jurisdictional standards on network reliability and security spending ERC0152
Implementing planning frameworks that provide for customer preferences on reliability EMO0026
Promoting efficient reliability investment in transmission networks EPR0028
Community consultation to help set distribution network standards EPR0033
Strategic priorities report on market development highlights consumer interests EMO0025
Annual market performance review of the power system for FY14
Bringing down barriers to connecting local generation ERC0147
More accurate metering data for consumers ERC0153
Helping customers change retailers more easily EPR0038
Proposed communication standards for new services enabled by smart meters EMO0028
Annual report on electricity price trends 2013
Consumer blueprint recommends energy info campaign RPR0001
Improving processes to restart the electricity network after large scale blackouts ERC0168
Strengthening reliability standard and settings arrangements ERC0160
New definitions to improve distribution reliability measurement EPR0041
Amended reliability settings REL0051
Annual market performance review of the power system for FY15
Increasing minimum ramp rate flexibility to expand dispatch possibilities ERC0165
Improving resilience in the face of financial shocks EMO0024
Strategic priorities report highlights need to integrate environmental and energy policy for a secure and reliable power system EMO0030
Submission on emissions reduction fund safeguard mechanism
More information for AEMO on demand side participation ERC0174
Network prices to reward individual energy consumption choices ERC0161
Connecting small embedded generators to the grid ERC0158
New arrangements for consumers to get their electricity consumption information ERC0171
Clearer information for consumers when they enter an energy contract RRC0001
Recommendations on energy sector competition policy frameworks
Annual report on electricity price trends 2014
Annual report on retail competition 2014
Annual report on retail competition 2015
More appropriate risk management practices for the Victorian DWGM GRC0027
Permanently extending the RERT safety-net feature for power system reliability ERC0198
More detailed information for AEMO to prepare demand forecasts ERC0184
Amended guidelines for last resort planning power EPR0047
Drovers of transmission and generation investment EPR0039
Annual market performance review of the power system for FY16
Making generator registration technology-neutral ERC0204
New B2B communications framework for advanced meters ERC0197
New meter replacement processes ERC0182
Giving embedded network customers a choice of service provider ERC0179
Stronger rules to deter false or misleading late rebids by generators ERC0166
Integration of energy storage in Australia SEA0002
Removing the metering monopoly and giving consumers access to competitive energy services ERC0169
New rules for a demand management incentive scheme ERC0177
Advice on implementing new communication standards for smart meters EMO0029
More accurate retail bills RRC0006
Annual report on electricity price trends 2015
Annual report on retail competition 2016
Delivering a more stable power system to keep the lights on EPR0053
New framework to help prevent system-wide blackouts ERC0212
Updated guidelines to help AEMO prevent insufficient electricity supply REL0061
Services to restart the power system after widespread blackouts REL0057
New guidelines for reviews of the reliability standard and settings REL0059
Submission to South Australia’s select committee on the 28 September 2016 blackout
Submission to independent review into future security of the national electricity market
Impact assessments for new large generator connections ERC0205
Using competition to build new transmission at the best price ERC0192
Redusing emissions at lowest cost EPR0055
AEMC and Climate Change Authority advice on affordable, secure, lower emissions energy
Submission to the inquiry into retirement of coal fired power stations
Supporting customers transferred to new retailers without consent ERC0195
New obligations to identify alternatives to poles and wires investment ERC0191
Improving mechanisms for distributors to manage retailer default ERC0183
Improving the market participant suspension framework ERC0202
http://www.aemc.gov.au/News-Center/What-s-New/Announcements/Final-rule-to-improve-the-market-participant-suspe
First report on annual monitoring of electricity network regulation EPR0050
Submission on consumer protections relating to new energy products and services
Submission on regulatory arrangements for off-grid energy systems
Submission to COAG Energy Council consultation paper on storage registration
Annual report on electricity price trends 2016
Keeping the system stable by maintaining system strength ERC0211
Simpler process for setting prices when the spot market is suspended ERC0224
Giving AEMO the right data to help with renewables integration ERC0219
Equipping the power system to stabilise its frequency ERC0214
Opening up competitive opportunities to help AEMO control system frequency ERC0186
Annual market performance review of the power system 2017
Introducing a market mechanism for inertia to maintain power system frequency ERC0208
Reviewing options to support a reliable supply of electricity as the power system transforms EPR0060
Frequency performance in the national electricity market EPR0059
Reviewing the suitability of the reliability standard and settings REL0064
The frequency operating standard in light of power system transformation REL0065
Strategic priorities for market development 2017
Identifying systemic issues that caused the South Australian system black EPR0057
Coordinating investment to add electricity supply at lowest cost EPR0052
Testing clean energy target designs SEA0025
Energy Security Board advice on the national energy guarantee
Improved liquidity in secondary trading of settlements residue ERC0220
Demand response services for a secure power system ERC0221
Demand response and new technologies to reduce network costs ERC0209
Options to give consumers more control over how they buy and sell power SEA0004
Annual report on energy retail competition 2017
Aligning market dispatch and five minute settlement ERC0201
More information for consumers on discounts and energy deals RRC0010
Supporting a competitive market for energy services contestability ERC0206
More choice and protection for embedded network customers RPR0006
Your engagement with us
We are working more closely with stakeholders and other market bodies to evolve the Commission’s way of working in more timely ways. Over the past year we have operated differently to increase collaboration, combining work on related reviews and rules, and involving more working groups to help inform our thinking.
Australian Energy Market Commission
Keep informed about AEMC activities www.aemc.gov.au