The Federal Government has announced its support of the Australian Energy Market Commission’s (AEMC) draft rule requiring generators to give at least three years’ notice of closure.
“The closure of Hazelwood with just six months’ notice drove up wholesale prices and threatened the reliability of our energy system,” Federal Minister for the Environment and Energy, Josh Frydenberg, said.
“Notice of closure will give the market time to invest in new dispatchable capacity before a generator closes down, stopping the price spikes and reliability pressures caused by the unexpected exit of large generators.”
A three year notice rule was a key recommendation of the Finkel Review, with the Chair of the Energy Security Board, Dr Kerry Schott AO, proposing a rule change to impose the obligation on generators.
The AEMC also recommended that the three year rule notice requirement be backed up by penalties for non-compliance.
The Federal Government will work with the COAG Energy Council to ensure that strong penalties are in place for generators that fail to provide at least three years’ notice of closure.
“The Turnbull Government’s priority is that we have sufficient continuous dispatchable power available to keep the lights on and bring prices down,” Minister Frydenberg said.
“The new rule complements the National Energy Guarantee, providing investor certainty and strengthening the reliability of our system.”