AEMC’s review of NEM financial market resilience

In June 2012 the Standing Council on Energy and Resources (SCER) requested that the Australian Energy Market Commission (AEMC), with input from market participants, provide advice under the Australian Energy Market Commission Establishment Act 2004 (SA) on:

  • the nature of any risks to financial stability in the NEM arising from financial interdependencies between market participants;
  • whether the existing mechanisms to mitigate these risks are adequate; and
  • if necessary, options to strengthen those existing mechanisms and minimise the identified risks and their consequences.

Issues paper

On 31 July 2012 we made a submission on the AEMC’s issues paper released on 8 June 2012. The submission focused on existing RoLR arrangements and issues from potential cascading retailer failure if a large retailer fails.

Submission on AEMC's Review of NEM financial market resilience (issues paper) - 31 July 2012 ( PDF 93.19 KB )

Options paper

On 20 December 2012 we made a submission on the AEMC’s options paper released on 9 November 2012. While welcoming proposed refinements to the RoLR regime, the submission noted RoLR arrangements are not appropriate for dealing with large retailer failure.

Submission on AEMC's Review of NEM financial market resilience (options paper) - 20 December 2012 ( PDF 1.73 MB )

First interim report

On 15 July 2013 we made a submission on AEMC's first interim report released on 4 June 2013. Overall, we considered that both the proposed amendments to the retailer of last resort (ROLR) regime and the introduction of a complementary special administration regime are firmly in the long-term interests of consumers. We encouraged the AEMC consider the issues that may also arise from failure of a large gas retailer; not addressing these issues represents an ongoing major gap in the development of a comprehensive financial resilience framework.

Submission on AEMC's NEM financial market resilience rule change (first draft report) - 15 July 2013 ( DOCX 80.2 KB | PDF 49.38 KB )

Second interim report

On 25 September 2014, the AER made a submission on the AEMC’s second interim report for its NEM financial resilience review.  The submission generally supported the AEMC’s proposed changes to the retailer of last resort regime in the National Energy Retail Law, and agreed that a separate decision-making framework is required for responding to the failure of very large market participants.

AER submission to AEMC - NEM financial market resilience rule change (second interim report) - 25 September 2014 ( DOCX 42.28 KB | PDF 212.46 KB )

More information

More information on AEMC's review of NEM financial market resilience can be found on the AEMC website.