The Australian Energy Market Commission (AEMC) has included ten recommendations for improvement in its final report regarding the Retailer of Last Resort (RoLR) scheme.
The report draws on insights gained by regulatory agencies, market participants, and governments during the energy crisis of 2022, which saw an unprecedented number of retailer failure events.
AEMC Chair, Anna Collyer, said that the recommendations would simplify and improve both the RoLR scheme and the gas directions framework, providing market participants with greater certainty and clarity before, during, and after retailer failure events.
“The recommendations focus on supporting more timely access to critical information in the event of retailer failures, reducing the cost of such failures for consumers and designated RoLRs, and improving incentives within the RoLR scheme,” Ms Collyer said.
“These recommendations were informed and shaped through extensive stakeholder consultation over the past two years.
“We believe they will enhance the RoLR scheme as an effective safety net, helping address the risks faced by retailers and consumers when a retailer fails, ultimately supporting better market outcomes and ongoing financial resilience in the retail market.”
In the National Electricity Market’s (NEM) competitive retail market, high levels of entry and a dynamic spot market create the risk of retailer failures. As such, retailer failures are likely to occur over time, necessitating efficient and effective exit arrangements that ensure continuity of supply for impacted consumers while minimising costs and systemic risks.
Most of the AEMC’s recommendations involve changes to the National Energy Retail Law (NERL), meaning they must be implemented by jurisdictions.
“The AEMC welcomes the opportunity to work constructively with jurisdictions, to progress these recommendations for implementation.”
The full report is available on the AEMC website.
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