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Apr 07 2022

Five Year Plant Closure Rule Change

The Australian Energy Council (AEC) notes the proposed change to the National Electricity Rules to extend the notice period for generator closures from 3.5 years to a minimum of five years.

The rule change is being suggested to provide additional notice to assist delivery of replacement capacity in the market to accommodate any shortfall created by the closure of a generator.

The Australian Energy Council’s Chief Executive, Sarah McNamara, said generators are already required to provide an indicative retirement date which is published by the market operator.

“Whilst they may look initially attractive, long firm notice requirements have complex and potentially counterproductive impacts. For example, they may force a generator to publish a firm date long before the operational circumstances of the plant are clear. As conditions change, inevitable adjustments will occur, that in turn can lead to a loss of confidence in the information.

“It should be recognised that generators, like any business operation, are subject to many unknowns and risks that such a rule cannot address. For example, plants may have physical failures or may be required to unexpectedly cease operations due to health & safety or environmental regulations. Company directors also have obligations under the Corporations Act 2001 in relation to operations that have become unexpectedly uneconomic.

“All of these issues would limit the effectiveness of such a rule.”

The AEC said the Energy Security Board, in its Post 2025 Market reform work, is separately considering these matters in depth.

“We look forward to raising these issues in the rule change consultation,” Ms McNamara said. 

About the Australian Energy Council

The Council represents 20 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses. AEC members are Australia’s biggest investors in renewable energy.

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