Final Report from the Select Committee on Energy Planning and Regulation in Australia

On Friday 20th December 2024 we saw the release of the Final Report from the Select Committee on Energy Planning and Regulation in Australia, which has been run by the Australian Senate in recent months:

Adding one more to the ‘Xmas Reading List*’ !

* a season-specific variation of the  ‘if I had more time here’s something I’d like to read in detail’ List.

This PDF report was linked at this Government page here (readers should note the page links to other materials).

(A)  Recommendations

They are lengthy, by worth copying in here:

Recommendation 1

5.7  The committee recommends that the Australian Government request the Productivity Commission undertake an inquiry into the Australian energy network, with particular focus on:

(a)  the adequacy of the planning regime in delivering economically efficient outcomes, including a proposed economic test as part of, or separate to, the Regulatory Investment Test for Transmission (RIT-T);

(b)  reviewing all current Actionable Projects within six months to ensure they provide sufficient economic value and are in the public interest;

(c)  the impact of opportunities in the RIT-T to increase project costs;

(d)  the apportionment of system charges including whether project overspend risk should be carried by consumers alone;

(e)  transmission access and pricing reform;

(f)  reviewing any conflicts of interest, and if required, the development of a plan of divestiture of the Australian Energy Market Operator (AEMO) subsidiaries;

(g)  whether responsibility for planning should be the responsibility of states and territories rather than AEMO;

(h)  whether conflicts of interest are arising from governments owning energy assets; and

(i)  undertaking an assessment of the competitive landscape across the National Energy Market (NEM) to determine where more competition can increase economic efficiency.

5.8  The committee also recommends the inquiry also examine whether any of the Productivity Commission’s recommendations made in the 2013 Electricity Network Regulation Inquiry remain outstanding, or require updating.

Recommendation 2

5.11  The committee recommends the Energy and Climate Change Ministerial Council (ECMC) develop and publish an updated Strategic Energy Plan.

Recommendation 3

5.14  The committee recommends terms of reference for the Australian Government’s recently commissioned National Electricity Market wholesale market settings review to review the governance structures of the market participants including an examination of the responsibilities of AEMO, the Australian Energy Market Commission (AEMC), Australian Energy Regulator (AER), and the Transmission Network Service Providers in the Integrated System Plan (ISP), RIT-T, and Feedback Loop process.

Recommendation 4

5.15  The committee recommends the ECMC consider requesting the Commonwealth Finance Minister make the AEMO a corporate Commonwealth entity through a rule made under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

Recommendation 5

5.17  The committee recommends the Australian Government publish on the Department of Climate Change, Energy, the Environment and Water’s website relevant information about the role, function, decision-making processes and work program of the Energy and Climate Change Ministerial Council (ECMC) and the Energy Advisory Panel (EAP), including the terms of reference and operating charter of the EAP.

Recommendation 6

5.20  The committee recommends the ECMC direct the AEMC to conduct post-implementation reviews on rule changes to determine whether rule changes are effective and operate as intended. These reviews should be published on the AEMC’s website once concluded.

Recommendation 7

5.27  The committee recommends the ECMC member ministers table a statement that each Final Integrated System Plan (ISP) meets the National Energy Objectives (NEOs) in their parliament within 30 days of AEMO publishing the Final ISP, starting with the 2026 ISP.

Recommendation 8

5.28  The committee recommends the ECMC consider a rule change so AEMO’s directors must sign off on both Draft and Final ISP attesting the plans meet the NEOs.

Recommendation 9

5.30  The committee recommends the ECMC consider a rule change to remove AEMO’s power to make projects actionable for the 2026 and 2028 ISP subject to the findings of the Productivity Commission review (i.e., Recommendation 1).

Recommendation 10

5.32  The committee recommends the ECMC consider a rule change to ensure the modelling carried out that determines actionable projects include an economic test, labour market impacts, pricing impacts, and productivity impacts, not just a cost-benefit analysis process.

Recommendation 11

5.35  The committee recommends the National Electricity Rules (NER) be reviewed to accommodate a rule change that encourages greater contestability and a diversity of providers in the NEM by adopting competitive bidding and recommendations from work carried out by the AEMC in 2022.

Recommendation 12

5.37  The committee recommends the AEMO align its modelling approach with open-source software and open data principles.

Recommendation 13

5.41  The committee recommends the ECMC consider a rule change to ensure the ISP include the creation of further Candidate Development Paths that incorporate greater use of non-network solutions and non-interconnection versions.

Recommendation 14

5.42  The committee recommends the ECMC consider a rule change to amend the ISP methodology to include consideration of additional counterfactuals when undertaking cost benefit analyses to include consideration of non-network solutions including but not limited to all forms of storage, Virtual Transmission Lines (VTL), virtual power plants (VPP) and other consumer energy resources.

Recommendation 15

5.43  The committee recommends the ECMC consider a rule change to the Cost Benefit Analysis Guidelines so that costs deemed as ‘sunk costs’ are included in a separate analysis so evidence is clear.

Recommendation 16

5.47  The committee recommends the Australian Government adequately resource the implementation of the Community Energy Resources (CER) Roadmap to accelerate CER integration into future ISPs.

Recommendation 17

5.54  The committee recommends the ECMC establish a CER consumer advocacy body to assist and enhance the work of Energy Consumers Australia (ECA).

Recommendation 18

5.55  The committee recommends the ECMC commission an independent review of the ECA board to ensure that the interests of consumers are best represented by members with appropriate skills and knowledge to do so.

Recommendation 19

5.56  The committee recommends the AER examine whether a positive duty of care should be imposed on energy market service providers to ensure appropriate protections are offered to consumers.

Recommendation 20

5.57  The committee recommends the ECMC review the National Energy Objectives so that greater weight is given to the long-term interests of consumers.

Recommendation 21

5.60  The committee recommends the Australian Government accelerate the establishment of a CER Technical Regulator, and the development of nationally consistent standards and consumer frameworks.

Recommendation 22

5.63  The committee recommends the Australian Government undertake a comprehensive review of network charges to ensure that consumers are not being unfairly penalised.

(B)  News Media commentary about this report

I’ve not seen anything in the media, yet, about this … if it appears and we see it (and if we have time) we will update the list below.

(C)  Commentary from Industry Organisations

Likewise, I’ve not seen anything yet.

(D)  Notes on Social Media

If we see anything (that we think is) particularly insightful on Social Media (and we have the time!) we’ll look to note it here:

1)  The only thing we have seen, at this point, was this note over the weekend from Bruce Mountain.