COAG Energy Council – Aug 2016

Energy Sector News

Sep 16
COAG Energy Council – Aug 2016

The Council of Australian Governments (COAG) Energy Council met for the fifth time on 19 Aug 2016.  Ministers acknowledged this as a time of considerable change as the Australian energy markets transition to low carbon fuel sources and new energy related technologies emerge.  In the meeting, the COAG Energy Council agreed significant reforms in three key areas:

  • improving liquidity and transparency of the gas market;
  • empowering customer choice; and
  • improving the stability and connectivity of the National Electricity Market (NEM).

All of these reforms impact Western Australia to some extent as the energy markets become more aligned, e.g. National Gas Law and Rules already apply in WA and through the Electricity Market Review, WA is adopting elements of the National Electricity Law and Rules.

Gas market reform

The Council agreed to a comprehensive domestic market reform package to lift competition and deliver more gas at lower prices, including:

  • better information for gas market trading;
  • establishing gas trading hubs in the North and South;
  • improving access to transport infrastructure;
  • the provision of better pricing information; and
  • encouraging more gas supply and more gas suppliers (state dependent).

Findings from the Australian Competition and Consumer Comission (ACCC)’s East Coast Gas Inquiry identified few constraints on the behaviour of existing pipeline operators and evidence of the exercise of market power.  Ministers have asked the Gas Market Reform Group to investigate what changes may be required to the coverage criteria under the National Gas Law (NGL) to address this issue.  It is important to remember that any changes to the NGL will be applicable in WA.

Ministers also noted a key issue for gas market reform is to increase the overall supply and the number of suppliers, particularly in the east coast market.  Ministers demonstrated their commitment to transparency in onshore gas activities to improve the confidence of investors and the community and confirmed their intent to work with the Australian Petroleum Production and Exploration Association (APPEA) to refine its Unconventional Gas Activities Report, to include more information, particularly on how industry engages with the community and landholders and how benefits are shared.  Again this report includes information on WA unconventional gas activities.

Market transformation

The COAG Energy Council recognised the significant changes underway in the electricity market driven by the take up of renewable generation and the emergence of new technologies, such as battery storage.  In order to better manage these changes, the Council has agreed:

Responses to the consultation paper on battery storage are required by 20 September 2016 and submissions on the other two papers are due by 4 October 2016.   Any resulting changes to the National Electricity Rules as a result of these consultations need to be considered by WA as its electricity market and regulatory regime becomes more aligned with the Eastern States.

Future Effect is monitoring COAG consultations and will be pleased to assist energy market participants in better understanding the reform process and implications for their businesses as well as help in drafting submissions in response to any of the consultation papers.