Two weeks ago, Chris Bowen announced a new independent panel led by Tim Nelson, to review wholesale market settings and provide reform recommendations.
The panel have today released the Terms of Reference and Release Package and opened submissions from the public. Submissions will be accepted until February 14th 2025. Final recommendations from the review are expected in late 2025.
The initial consultation overview page states:
Through the stakeholder engagement process the Panel is seeking the insights of states and territories, market bodies, generators, retailers, investors and electricity consumers (industrial, large and small-scale) across the NEM and beyond.
The Review will consider perspectives from other markets overseas, academic and policy literature, micro-economic and social-policy principles and other industries with similar long-lived, capital-intensive investment features. The Review will also consider previous and current work of governments and the market bodies. The Review is expected to undertake modelling and other analysis to provide a basis for comparison between different policy options and we encourage stakeholders to share their insights and knowledge to inform this process.
The document states that the panel is specifically seeking feedback from market stakeholders on five topics:
- Investment incentives
- Consumer interaction with the wholesale market
- Changing nature of spot electricity prices
- Essential system services
- Enhancing competition
Within these five topics, the document from the panel posed several questions to potential respondents. The full list of these questions is below:
- How might the NEM wholesale market and derivate markets most efficiently evolve to provide signals for investment in firmed, renewable generation and storage capacity?
- Is there a role for certificated schemes to promote investment in firmed, renewable generation and storage and what might these look like?
- Could the Retailer Reliability Obligation (RRO) play a role to incentivise new investment if it was expanded in the future?
- Could other capacity mechanisms efficiently attract investment in firmed, renewable generation and storage capacity?
- How can markets ensure we have sufficient capacity in place when and where we need it before existing resources retire?
- How do the market settings preferred by stakeholders provide sufficient confidence to consumers and governments that capacity will be delivered?
- How can the NEM wholesale market and any other markets work in tandem to ensure we have appropriate signals for the right type of resources in place when and where we need it?
- How can these market settings facilitate emissions reduction in line with the National Electricity Objective and Australia’s international commitments?
- What can be done to facilitate better interaction between the demand-side, the spot market and any existing or future financial markets?
- How might the NEM wholesale market best allow for customers to engage in the market to benefit from their investment in CER, while allowing for different consumers to choose how they engage and continuing to recognise electricity is an essential service with associated accessibility issues for many consumers?
- How will prices at different times of the day and year change and evolve with the move towards firmed, renewable energy generation and storage?
- How might the NEM wholesale market and derivative markets allow market participants to most effectively respond to fluctuating prices and manage price risk?
- What new markets and other measures might ensure they are provided?
- Which entities are best placed to determine what is needed, where and when?
- To maintain system security and strength, how can we ensure these services are procured before existing plant retires?
- How can we promote innovation in how these services can be provided at lowest cost?
- How might we harness the larger number of small resources and growing participation to ensure all markets (i.e. spot, forwards, retail etc) are increasingly competitive?
All the above assumes an engaged and sophisticated energy consumer. This is unrealistic given the generally poor levels of energy literacy of most residential and small business consumers. The consultation overview states it is seeking insights from “electricity consumers (industrial, large and small-scale)” – not sure what their definition of “small-scale” is….. if they truly wanted insights from the customer classes that consume the bulk of grid supplied electricity why didn’t they just write “residential and small business” electricity consumers? Just another consultation to add to the myriad that electricity consumers and their advocates are already expected to participate in for free. No wonder Australia’s electricity system has failed electricity consumers…. because it has poor representation from electricity consumers at both a state and national level. So tired of the worn out phrase of we put consumers first. Nothing could be further from the truth.