In August 2021, Energy ministers agreed that the national gas regulatory framework needed review to accommodate the development of hydrogen, biomethane and other renewable gases.
The review had the purpose of:
- Identifying potential issues in the National Gas Rules (NGR) and National Energy Retail Regulations (NERR) that could emerge if the scope of the national gas regulatory framework is extended to hydrogen and other renewable gases.
- Developing draft initial rules to address these issues through a consultative process.
- Informing jurisdictional officials of any National Gas Law (NGL) or National Energy Retail Law (NERL) changes that it considers should be made to achieve the objective of the Energy Ministers.
In November 2022, The Australian Energy Market Commission (AEMC) and Australian Energy Market Operator (AEMO) published their final review for extending the regulatory frameworks to include hydrogen and renewable gases.
The review outlined recommended changes to the national gas regulatory framework, and concluded the need to:
- Enable access to pipelines and support investment by extending the economic regulatory framework.
- Support competition through improvements to the ring-fencing framework.
- Extend the market transparency mechanisms to enable informed and efficient decision making.
- Streamline operational arrangements for the Short-Term Trading Market (STTM).
- Adapt the Victorian DWGM (to work in conjunction with the DWGM distribution connected facilities rule change).
- Allow new services and commodities in the retail gas markets.
- Enable consumers to be informed about a change in the type of gas supplied.
- Retain the draft regulatory sandbox rules in their current form, as they should be suitable (fit for purpose) to cover hydrogen, biomethane and other renewable gases, thus enabling trial projects.
The recommendations could directly affect the:
- Efficient delivery of new services through the operation of markets that enable new entrants to emerge and efficient investment to occur.
- Continued innovation in developing new services for customers.
- Roles and responsibilities for the quality, safety, reliability, and security of supply of gas, to maintain operational safety of infrastructure and customer equipment and appliances.
- Existing consumer protections to be maintained during the transition to the increasing use of hydrogen and renewable gases.
The full review is available here.
Proposed Procedure Change (PPC)
AEMO’s final recommendation report has underscored the necessity for modifications to the STTM Procedures to ensure a comprehensive scope covering the various gases. Consequently, Energy Ministers in October 2022 sanctioned amendments extending the NGL and NERL to encompass hydrogen and other renewable gases. AEMO is presently engaged in consultations concerning the adjustments to the STTM and Retail Market (RM) Procedures.
These proposed procedure changes encompass:
- Amendments to procedure and technical documents.
- Changes to STTM custody transfer points.
- Updating of criteria for registration as a STTM Net Metered Facility.
- Distribution system allocation for STTM net metered facility changes.
- Allowance to specify validation on any STTM input data.
- Updated STTM transitional arrangements.
Detailed information regarding the PPC and the recommended amendments is accessible here. Consultation on the PPC closed on 10 September. The Impact and Implementation Report will be issued in early October with a consultation period closing 5 November 2024. The final Notice of Decision is expected to be issued on 3 December for implementation from 3 March 2025.
The National Energy Laws Amendment (Other Gases) was officially announced in the South Australian Government Gazette on March 21, 2024. Failure to execute the proposed modifications may result in discrepancies between the STTM and RM procedures and the new Law and Rules. Neglecting to advance with the changes in the PPC could compromise the clarity, precision, and coherence of the procedures, potentially impeding the non-controversial enhancements to the RMP.
How do these changes affect you?
The procedural changes extend the coverage of the STTM and RM Procedures to include covered gases (I.e. hydrogen and biomethane) production facilities. From 3 March 2025 AEMO may register new facilities that are a primary gas production facility or a gas blending facility, and these facilities may be included in STTM ex ante schedules commencing on 10 March 2025.
Currently, the only operational facility that may register as a Net Metered Facility is AGIG’s Hydrogen Park South Australia facility. Although a STTM Net Metered Facility will require Allocation Agents and Distributors to provide net injection quantities and net withdrawal quantities, AGIG’s proposed metering configuration and blending vessel ownership structure do not require any system changes for Distributors or AEMO.
The minor procedural changes to the STTM and RM only effect documentation. As such, current market participants will not be required to make any modifications to their existing systems or business processes, meaning that the changes will not result in any costs to the participants. An expected benefit is the reduction in overhead costs, from reducing the time interpreting the procedure provisions, with clearer, precise, and unambiguous procedures.
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