Watt’s up: Regulatory round-up

The AEMC has made a final rule to explicitly recognise distribution network resilience in the National Electricity Rules (NER). The final rule will provide regulatory clarity for Distribution Network Service Providers (DNSPs) and the AER on how to assess the economic efficiency of resilience expenditure proposals to reduce the risk and impact on consumers of power outages caused by severe weather events, taking into account the impacts of climate change.

The AEMC final rule establishes a formal framework for distribution network resilience in the NER, which includes:

• New resilience expenditure factors that DNSPs and the AER must have regard to when proposing and assessing capital and operating expenditure for resilience.
• Formal Network Resilience Guidelines that the AER must develop, publish and maintain in accordance with a set of requirements. These guidelines may be new stand-alone guidelines or included as part of another guideline.
• New distribution annual planning and reporting requirements for resilience.

The final rule provides that, from 2 October 2025, the Victorian DNSPs may take the new resilience expenditure factors into account in their revised regulatory proposals for the 2026-31 regulatory control period, and the AER must take the new factors into account in its final distribution determinations.

The final rule took effect on 2 October 2025.

• If the net loop IRSR is positive, it will be distributed to SRD unit holders based on the net energy transfer (‘net trade’) between the connected regions, instead of the physical flows on the interconnectors.
• If the net loop IRSR is negative, it will be recovered from the CNSPs in each connected region in proportion to regional demand.
• Settlements residue auction (SRA) proceeds and positive IRSR attributed to any unsold units (‘unsold IRSR’) will be allocated to the importing region’s CNSP.

The Regulations make modifications to the NER.

For context, the enabling Act expands VicGrid’s powers to plan, develop, and deliver electricity transmission infrastructure in Victoria as part of Victoria’s renewable energy transition strategy. Previously, VicGrid shared its role with AEMO.

Broadly, the Regulations provide the following:

• prescribe the Commonwealth Scientific and Industrial Research Organisation as a body that is permitted to receive protected information held by VicGrid,
• prescribe the maximum amount of VicGrid’s civil monetary liability and the maximum amount of civil monetary liability of VicGrid’s officers and employees for the purposes of section 55E(2) of the Act, and
• confer on AEMO a function of providing services and other support to VicGrid in relation to the conferral of functions and powers on VicGrid.