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.
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.
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.
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.
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.