Electricity Market Review – Rule Change Project

WEM Information

Dec 15
Electricity Market Review – Rule Change Project

The Public Utilities Office (PUO) is undertaking this project as part of the Electricity Market Review (EMR) suite of projects.  This project will establish a new ‘Rule Change Body’ to undertake the administrative and decision-making functions around any proposed changes to the Wholesale Electricity Market (WEM) Rules and Gas Services Information (GIS) Rules.

Initially, the Independent Market Operator (IMO) had the functions of developing, approving, administering and enforcing the Market Rules, as well as operating the WEM.  However, with the WA Government’s announcement on 30 September 2015, that the Australian Energy Market Operator (AEMO) would adopt the WEM market operator function, the responsibility for the Rule Change process needs to be transferred to another WA government entity.

On 6 July 2015, the PUO released its first position paper on the potential design for a new Rule Change Assessment Panel and revised Rule Change process.  Submissions received in response to this position paper helped to inform the high level design options for the new Rule Change body and a second position paper was released on 18 November 2015.

The EMR Steering Committee’s preferred option is a Rule Change Panel and Executive Officer supported by, but independent of, the Economic Regulation Authority (ERA).  The Rule Change Panel would comprise a prescribed number of members that are selected and appointed by the Minister for Energy in accordance with specified criteria, prescribed under regulations, relating to skills, experience and independence.

The ERA would support the day-to-day operation of the rule change process by supplying ‘secretariat services’ to the Rule Change Panel under a service level agreement.  The creation of the Rule Change Panel as a separate decision-making body is considered preferable because:

  • there is a greater scope for ensuring that that the Panel comprises members with an appropriate mix of skills and expertise to deal with the WEM Rules and GSI Rules;
  • a decision-making body that is separate from the ERA is preferable in avoiding potential conflicts of interest; and
  • the design option addresses potential conflicts of interest between:
    • The rule change function and the ERA’s role in rule administration (market monitoring, compliance and enforcement) as it limits the ERA’s role to just providing secretariat services while decision-making is by the separate Rule Change Panel.
    • There is also a clear separation between the ERA’s role in rule administration and the ERA’s compliance monitoring and enforcement functions.

The EMR Steering Committee also proposes:

  • no common membership of the ERA and the Rule Change Panel; and
  • that an invitation is extended to the Australian Energy Market Commission (AEMC) to provide representation on the Rule Change Panel of one member.

Following receipt of submissions on the submission paper in early December 2015, the development of regulations and amendments to the WEM and Gas Rules will be undertaken from late 2015/early 2016.  It is expected that the new Rule Change body will be in place by April 2016.