Energy National Cabinet Reform Committee 24 September

Energy Ministers met today as part of the Energy National Cabinet Reform Committee.

Ministers agreed on the final package of reforms for the Post-2025 National Electricity Market (NEM) to be provided to National Cabinet next month, based on recommendations provided by the Energy Security Board (ESB).

The proposed reforms include:

  • adoption of principles for jurisdictional investment schemes
  • the option of a ministerial lever for the T 3 instrument under the existing Retailer Reliability Obligation
  • progression of a Distributed Energy Resources (DER) Implementation Plan
  • adoption of a Ministerial lever for emergency backstop measures for minimum load conditions
  • enhancements to the transparency of generator availability
  • implementation of a jurisdictional strategic reserve

Ministers also agreed to progress further design work on a mechanism that specifically values capacity in the NEM. This is to be underpinned by principles that ensure the design for a market mechanism delivers investment in an efficient mix of variable and firm capacity that meets reliability at lowest cost, enabling jurisdictions to continue to meet their energy and emissions reduction objectives.

Ministers also agreed to support further design work to develop a congestion management model.

The full suite of reforms will ensure the NEM remains fit-for-purpose and capable of providing the full range of services necessary to deliver an affordable, secure, reliable and lower emissions electricity system for consumers.

Ministers agreed a package of transmission reforms to be recommended to National Cabinet, including the adoption of the Interim Framework for Renewable Energy Zones (REZ) to support a nationally consistent framework for connecting to a REZ; promote REZ adoption; and encourage participation.

Ministers also agreed to publish the Interim Framework for Renewable Energy Zones: Final recommendations after National Cabinet’s consideration, and to progress further work on fair cost allocation.

ENERGY MINISTERS’ MEETING

Ministers acknowledged the significant work undertaken by the Energy Security Board to inform the direction of these reforms.

As agreed by Ministers at their meeting of 20 August 2021, following the end of the current Chair and Deputy Chair terms on 31 October 2021 the ESB will be reformed to ensure it can continue to undertake its critical role in the energy market.

Ministers commended Dr Kerry Schott AO and Mr David Swift for their professionalism and accomplishments in leading the ESB since its establishment in 2017.

The proposed reforms will:

  • Streamline the ESB by reducing its membership to the heads of the three market bodies (the Australian Energy Market Commission (AEMC), the Australian Energy Market Operator (AEMO) and the Australian Energy Regulator (AER));
  • The head of the AEMC will Chair the ESB, although Energy Ministers retain the power to appoint an independent Chair if necessary;
  • Assist the ESB to coordinate the three market bodies in their roles rule-making, operating and regulating the National Energy Market; and
  • Pivot the ESB to implementing the Post-2025 market design project, ensuring Australia’s energy markets remain secure, reliable and affordable in the face of unprecedented structural change throughout the energy sector.

At today’s Energy Ministers’ Meeting, Ministers agreed to set of governance protocols to guide their future decision making.

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