Electricity Market Review Phase 2
Information Paper: Rule change project
Following Phase 1 of the Electricity Market Review, Cabinet approved the commencement of
Phase 2 of the Electricity Market Review including the detailed design of reforms (Stage 1) and,
subject to government approval, the implementation of reforms (Stage 2).
Project scope
The Rule change project initially sought to resolve the potential for a conflict of interest that had
arisen from the Independent market Operator being the operator and approver of the Wholesale
Electricity Market (WEM) Rules and the Gas Services Information (Gas) Rules, while also
administering the process for making Market and Gas Rule Changes.
On 30 September 2015, the Minister for Energy made an announcement on electricity reforms that
included the transfer of the WEM operator function to the Australian Energy Market Operator and
the transfer of the functions for administering and approving WEM and Gas Rule Changes to a
Western Australian government entity.
Consequently, the Rule change project has been revised to:

identify a preferred option for a new rule change body to consider and approve (or reject)
rule change proposals;

identify the revisions that are required to the existing rule (and procedure) change
processes to enable the new body to effectively acquit its responsibilities.
Project objective
The Rule change project will transfer and improve the governance of the rule change processes.
Design aspects to be addressed include:

the composition of the rule change body;

the governance arrangements for the rule change body;

information, reporting and accountability requirements for the rule change body;

associated revisions to the rule change (and procedure change) processes for electricity
and gas;

cost recovery arrangements; and
As an overarching goal, the new governance arrangements will be developed to:

be consistent with sound regulatory practice;

promote high-quality decisions consistent with the defined market objectives;

provide an appropriate balance between accountability and certainty;
Project fact sheet: Energy Market Operations and Processes project

accommodate effective and transparent rule change functions while imposing minimal
changes to the existing arrangements; and

be simple and cost-effective to implement and operate.
What is the current status of the project?
On 6 July 2015, a position paper – A Proposed Design for the New Rule Change Assessment
Panel was released on the Electricity Market Review website. The position paper set out a
proposed initial design for a new ‘Rule Change Assessment Panel’ for each of the design aspects
in the project scope, assessed against the project criteria. Submissions closed on 14 August 2015.
The proposed design was superseded by the Minister’s announcement of 30 September 2015.
As a result, the Electricity Market Review Team is now developing, for the Steering Committee’s
consideration, revised design options for the new Rule Change body along with advice on the
changes needed to the existing rule (and procedure) change processes to allow the new Rule
Change body to perform the rule administration and approval functions. A new Position Paper will
be released in November 2015 with an associated opportunity for interested parties to make
submissions.
Project schedule
Public consultation was undertaken with the release of the position paper and will inform the
revised design options for new Rule Change body. The development of regulations and
amendments to the WEM and Gas Rules will be undertaken from November 2015. It is expected
that the new Rule Change body will be in place in April 2016.
How can I get more information?
Invitations to periodic industry briefings on the Electricity Market Review will be sent through the
Electricity Market Review mailing list (please email [email protected] to
join the list). In addition, updates and discussions on this project will be conducted at the regular
meetings of the Market Advisory Committee and the Gas Advisory Board. Reports, consultation
information and other project updates will be posted to the Electricity Market Review website.
Stakeholders with specific enquiries related to this project are encouraged to contact Natalia
Kostecki (Project Lead) on 6551 4669 or by email at [email protected].
Updates specific to the Rule Change Project will be posted to the Electricity Market Review
website.
Department of Finance | Public Utilities Office