Big Win for Energy Consumers, Market: 5 Minute Settlement Rule Delayed Just 3 Months
The Australian Energy Market Commission (AEMC) has announced that it will delay the implementation of its crucial ‘five minute settlement’ rule by just three months, due to COVID-19.
The Australia Institute has opposed any excessive delays to the implementation of this rule, such as those proposed by incumbent energy generators, and welcome this decision from the AEMC.
“The AEMC has made a good decision on the basis of the evidence presented by market participants and its own analysis,” said Dan Cass, Energy Policy & Regulatory Lead at The Australia Institute.
“The AEMC found that COVID-19 has only set back industry capabilities to deliver this rule change 2-3 months, which is good news and means other reforms should continue.
“Far from delaying beneficial reforms, we should be pursuing a stimulatory approach to modern market design, bringing forward benefits to consumers and helping with economic recovery and decarbonisation.
“As a result of this short delay, consumers will have to wait a little longer for the price benefits of 5MS to reach their bills, but it is far less than the 2-3 year delay that some incumbents proposed.
“It beggars belief that some energy companies were proposing this reform should have taken a total of almost seven years to implement. At that rate of transformation, it would take Australia a century to get the grid ready for the end of coal.
“The 3 month delay means industry will have had three years and 10 months to make the shift to five minute settlement. The Australian Energy Council claimed a six month delay was necessary but the AEMC has noted that it ‘received limited data’ on project costs from market participants.
“Importantly, this delay will not have a knock-on effect leading to postponement of other major reforms leading up to the Post-2025 market redesign, which was one of our major concerns.”