The Energy Regulation and Markets Review - Stikeman Elliott

Australia
enable the participation of both supply participants and demand side consumers. The
Stage 3 DSP Review is due to be completed by September 2012. 48
Key decision
In Australian Energy Regulator v. Stanwell Corporation Limited, 49 the Federal Court
dismissed the action brought by the AER against Stanwell Corporation Limited for breach
of the good faith bidding obligations set out in the NER. Rule 3.8.22A requires generators
and market participants to make dispatch offers, dispatch bids and rebids in good faith.
The AER had alleged that a series of rebids made by Stanwell on 22 and 23 February 2008
were not made in good faith because they were made with the intention that if the dispatch
price did not rise sufficiently as a result of the rebid, Stanwell would make a further rebid
in an effort to increase the dispatch price. In determining whether the rebids occurred in
good faith, the court took the view that the market must be considered as a whole. It was
necessary for the AER to demonstrate, on the balance of probabilities, that the relevant
trader did not have a genuine intention to honour the bid at the time that it was made. The
decision is the first judicial consideration of the good faith bidding obligations in the NER.
NECF and NERL
As mentioned previously, another major change in the energy industry is the ongoing
introduction of the NECF. The Joint Implementation Group in 2011 consulted with
interested parties across all sectors, and received discussion papers from all affected
jurisdictions.
The key legal instrument giving effect to the NECF is the National Energy
Retail Law (South Australia) Act 2011 (‘the NERL’), which will be adopted by each
participating jurisdiction. The Bills to implement the NERL are currently being debated
in each participating jurisdiction’s parliament.
VII
CONCLUSIONS and OUTLOOK
Recent years have seen a tremendous amount of change in the energy markets in
Australia. One of the biggest challenges facing decision-makers is determining how to
best transition to a lower carbon energy sector. The transition will involve significant
change to how electricity and gas is generated, transported and consumed. In particular,
significant levels of new generation investment will be required to maintain reliability of
supply and to meet the objectives of the Clean Energy Future Plan.
In a report released in 2011, the AEMC identified the following key challenges
facing energy markets: 50
a rising peak demand;
b investment challenge;
48 www.mce.gov.au/dsp/default/html.
49 [2011] FCA 991, available at www.austlii.edu.au/au/cases/cth/FCA/2011/991.html.
50 AEMC, Strategic Priorities for Energy Market Development, Sydney, August 2011, available at
www.aemc.gov.au/market-reviews/completed/aemc-strategic-priorities-discussion-paper.html.
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