Australia's energy markets operate under a set of rules and regulations that have a clear objective - to meet the long-term interests of consumers.
Consumer choices and protections have been enhanced over the past 25 years through a series of major reforms. National laws have been introduced in most states and territories to ensure that most markets are regulated by a set of nationally consistent laws. Where these laws are not in place governments are working to ensure the rules governing electricity and gas markets and consumer protections are as consistent as possible.
The Council's Power of Choice initiatives will give consumers greater options in the way they source and use electricity through reforms which support the rollout of advanced meters and the development of innovative tariffs and energy services. This will help to empower consumers to make informed choices about their energy supply and use and decide which best meets their needs.
Consumer protections and advocacy
Australian consumers rely on access to a reliable supply of energy. Ensuring that consumers have fair and honest dealings with energy businesses provides them with the confidence to make good choices with their use and supply of energy.
Reducing regulatory complexity and lowering barriers for energy service providers to enter the market means more competition and more opportunities for consumers to control their energy use and bills.
Along with increasing competition have come stronger consumer protections through the National Energy Customer Framework (NECF).
Consumers also have a voice in energy market matters through the creation of Energy Consumers Australia, a national advocacy body that aims to inform regulatory and policy decisions impacting on consumers.
Energy Market Transformation
The energy sector is undergoing a major transition, driven by changing technologies, new business models, increasing consumer engagement and climate change policy.
Competitive energy markets with low barriers to entry provide strong incentives for innovation and the adoption of new technologies that benefit consumers. These technologies will empower consumers to engage more actively with their energy decisions, by providing a wider range of energy supply and use options, as well providing new options around the future development of the energy system.
The adoption of new technologies, such as distributed generation, electric vehicles, storage, and energy management systems will challenge traditional business models for the established energy markets. It is critical that the laws and rules governing energy markets evolve in such a way that they support and appropriately accommodate technological change. The Energy Council has already pursued significant work in this area but recognises further assessment is required to ensure the regulatory frameworks are flexible enough to meet these challenges.
At its December 2015 meeting, the Energy Council endorsed a work program to be progressed by the Energy Market Transformation Project Team, to address four key areas. This work is complementary to the work being done by the Energy Council to better integrate energy and climate policies.
Enhanced Competition and Innovation - This work stream is looking at barriers which may prevent:
competition developing in markets for services delivered by emerging technologies such as battery storage.
investment by regulated network providers in innovative technologies to improve the efficiency of the regulated service.
Empowering Consumers - This work stream will review what consumer protections should apply to customers with respect to new products and supply options emerging in the electricity market.
Ongoing Power System Security - This work stream will consider work the Australian Energy Market Operator (AEMO) is doing on whether current arrangements for managing power system security are adequate to integrate large volumes of intermittent generation.
Efficient Investment and Operation of Electricity Infrastructure - This work stream assesses the flexibility of existing network regulatory arrangements, particularly the economic framework, as we shift from a centralised system to a more decentralised one.
The Energy Council’s Energy Market Transformation Project Team has prepared a work program.
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At its August 2016 meeting, the Energy Council agreed to release three consultation papers seeking feedback on issues relating to stand-alone systems, consumer protections and registration systems for battery storage.
For more information on these consultation papers click here.
At its December 2016 meeting, the Energy Council agreed to undertake a cost-benefit analysis of a national battery storage register. On 22 May 2017, Energy Council officials released a draft report and consultation paper on the cost-benefit analysis. On 14 July 2017, the Energy Council agreed to release the final cost-benefit analysis report. For more information on the consultation process and the report, click here.
Australian Gas Markets
Australia's gas markets are changing rapidly.
The east coast gas markets are now interconnected and natural gas flows are more dynamic so gas can move across the network to where it is needed. The markets are also adjusting to emerging exposure to international gas prices as the export of gas from the east coast occurs for the first time.
Balancing supply and demand is critical to ensuring that Australian consumers and industry can access affordable gas when and where they need it.
The Council's Australian Gas Market Vision underlies a number of initiatives to address supply and competition concerns, and to make it easier to buy and sell gas in Australia.
Increasing gas demand is putting pressure on both gas supply and prices, and impacts certainty for business and consumers in domestic markets.
Energy Council Ministers are working together to bring scientific and regulatory expertise to support the responsible development of unconventional gas supplies.
Gas Market Development
The Energy Council is committed to a comprehensive Gas Market Reform Package in August 2016, to drive the achievement of its Australian Gas Market Vision for a liquid wholesale gas market where an efficient reference price provides signals for investment and new gas supply.
The reform package comprises four priority areas and 15 reform measures. The four priority areas are gas supply, market operation, gas transportation and market transparency.
The Energy Council has established a dedicated Gas Market Reform Group to lead the implementation of gas market reforms. More information is available here.
Energy & Carbon Policy
Electricity generation contributes around one third of Australia's total emissions, so has a critical role in meeting emissions reductions targets.
Energy and Carbon
Successful integration of climate and energy policy will be crucial to meeting Australia's climate change goals at least cost to the community.
The Energy Council is developing new platforms to ensure policies on energy and climate change are assessed to maximise their benefit and avoid any unintended effects for prices and the energy market.
The National Energy Productivity Plan (NEPP) is designed to increase the value we get from our investment in energy. It's an effective way to lower emissions and reduce costs, while improving our competitiveness and growing the economy and jobs.
Improving Institutional Performance
Australia's energy markets are facing significant disruptions and the structures governing them must be flexible enough to adapt to new challenges. Delivering the best outcomes for energy consumers requires clearly specified and stable policies, appropriate regulations, the delegation of some roles to specialist institutions, suitably qualified and experienced institutional managers, and institutional separation.
Review of Governance Arrangements
The final report of the Review of Governance Arrangements for Australian Energy Markets, which was commissioned by the Energy Council, was released in October 2015. The report concluded that the current arrangements are fundamentally sound but also identified opportunities to improve the transparency, timeliness, resources, and clarity of function and purpose of energy market governance arrangements that will increase confidence in energy market policy and decision making.
The COAG Energy Council welcomed the final report and released its response in December 2015. The Council’s Senior Committee of Officials has agreed an implementation plan to deliver the Council’s response to the Governance Review.
The Governance Review Implementation Plan (GRIP) breaks up the agreed responses into eight projects, with differing priority levels. The three key projects currently underway are the reforming of Council operations, improving AEMC processes, and the proposed separation of the AER from the Australian Competition and Consumer Commission (ACCC). All of these initiatives are aimed at improving institutional performance.
The COAG Energy Council’s response and the GRIP can be found here.
Statements of Expectations for the AEMC and AER
In 2013, the Council agreed to an accountability and performance framework for the AEMC and the AER, consisting of:
Statement of Expectations developed by the Council
Statement of Intent to be developed by the AEMC and AER respectively.
For more on this project, click here.
Security, Reliability, Affordability and Sustainability of the National Electricity Market
On 9 June 2017, Australia's Chief Scientist, Dr Finkel delivered his Final Report of the Review to the meeting of Council of Australian Governments (COAG) Leaders' meeting. Following the release of the Final Report, Dr Finkel addressed the National Press Club on 21 June with a speech titled 'National Electricity Market Reform - a blueprint for the future'.The Media Release: Blueprint for a world-class Electricity System can be found here.Dr Finkel's speech can be found here.On 14 July 2017, Energy Council responded to the Review and agreed on a timeline to implement 49 of the 50 recommendations, while noting the significance of the Clean Energy Target recommendation. Actions taken by the Energy Council will deliver the key outcomes of increased security, future reliability, rewarding consumers and lower emissions through an orderly transition, system planning and stronger governance.Ministers agreed to establish an Energy Security Board (ESB), a new body comprising an independent Chair, Deputy Chair and the heads of the Australian Energy Market Commission, Australian Energy Market Operator and the Australian Energy Regulator.For more information on the establishment of the ESB, please click here.For more information on the Independent Review, please click here.
Energy Market Governance
The COAG Energy Council (the Council) is a Ministerial forum made up of representatives of the Commonwealth, State, Territory and New Zealand governments. It has responsibility for monitoring and reforming national energy markets. This includes increasing the nationwide consistency of national energy market regulatory frameworks to reduce costs and improve energy sector efficiency. The Council’s terms of reference can be found here.The role of the Council in energy market reform and the associated governance arrangements are set out the intergovernmental agreement known as the Australian Energy Market Agreement (AEMA), as amended December 2013. The AEMA can be found here.The Council is supported in developing national energy market policy by the Senior Committee Officials (SCO). SCO is composed of senior officials from Council members and is chaired by the Commonwealth.The Council has oversight of the three national market institutions responsible for the operation of national energy markets (including the National Electricity Market (NEM)). These are:
A comprehensive review of energy market governance, the Review of Governance Arrangements in Australian Energy Markets, was completed in October 2015 and was considered by Ministers at the December 2015 Council meeting. For more information about the Review, click here.The Council also works closely with:
the Australian Energy Market Commission (AEMC) - the rule maker and market development adviser;
the Australian Energy Market Operator (AEMO) - the system operator; and
the Australian Energy Regulator (AER) - the economic regulator and rule enforcer.
For more information about these institutions, follow the links below:
Energy Consumers Australia (ECA) - advocate for the long-term interests of energy consumers; and the
National Offshore Petroleum and Environmental Management Authority (NOPSEMA) - regulators of safety, well integrity and environmental management for the offshore petroleum industry.