Australian electricity and gas markets – October 2026 Update 

What you need to know

October brought landmark gas reform, important network and market rule decisions and further evidence of the battery boom, with Energy Ministers set to consider key NEM reforms, including the ESEM, in December.

• Rule and regulatory decisions with practical impact:
  • the AEMC's final rule harmonises compensation for AEMO directions, market suspension and administered pricing, including allowing opportunity costs to be claimed, with most changes commencing in stages from 2027 to 2029; and
  • the AER refused Ergon Energy's and Energex's bid to drop optional demand and flexible load tariffs, and continues to target December 2026 for the final 2026 Rate of Return Instrument.
• Gas reservation is coming: if passed, the Domestic Gas Reservation Bills (passed by the House and now before a Senate committee) would require LNG exporters to hold a licence from 1 January 2028 and generally supply gas equal to 20% of their exports to the domestic market, subject to adjustments.
• Batteries are reshaping the NEM: they made up 76% of new connection applications and, for the first time, supplied more of the evening peak than gas, while Q3 wholesale prices fell 27% year-on-year and Project EnergyConnect loop-based settlement was scheduled to commence on 1 November 2026.

Highlights for October 2026

In this update, we take a look at the latest rule changes and market updates published in October 2026 which affect participants in the Australian electricity and gas markets.

National Electricity Market

National Electricity Rules

AER to review and remake the Waratah Super Battery revenue determinations

On 8 October 2026, the Australian Energy Regulator (AER) decided, on Transgrid's proposal as Network Operator, to review and remake the Paired Generation Service and System Integrity Protection Scheme (SIPS) Battery Service revenue determinations for the Waratah Super Battery under the Electricity Infrastructure Investment Act 2020 (NSW). The remade determinations reflect amended contractual arrangements, including an extended project term, a corresponding extension of the schedule of payments and new and amended revenue adjustment mechanisms. The changes allow the battery to trade in the energy market while still supporting energy security, with trading revenue shared with consumers.

AER consults on additional discussion paper for the 2026 Rate of Return Instrument

On 9 October 2026, the Australian Energy Regulator (AER) published a post draft decision discussion paper on the 2026 Rate of Return Instrument (RORI), setting out further analysis on the equity beta and market risk premium in response to the Independent Panel's report. The RORI binds network businesses and the AER and will apply to electricity and gas network determinations made after it is finalised. Submissions closed on 23 October 2026, and the AER continues to target December 2026 for the final RORI.

Final rule – Improving compensation frameworks and new Electricity Rules version 255

On 15 October 2026, the Australian Energy Market Commission (AEMC) published a final determination and final rule (ERC0425) on rule change requests from the Australian Energy Market Operator (AEMO) and Tilt Renewables. The final rule largely implements the recommendations of the AEMC's 2024 review of compensation frameworks and is intended to give participants clearer, more predictable compensation outcomes when they are directed or affected during system and market stress events. Key elements include:

• Opportunity costs: opportunity costs can be claimed across all compensation frameworks (directions, market suspension and administered pricing).
• Calculation: a consistent methodology applies across frameworks, with preliminary compensation calculated using a technology and region-specific volume-weighted average price.
• Process and governance: AEMO will receive and assess all claims, with a consistent 40-business-day time limit for lodging claims.
• Threshold and cost recovery: a consistent $10,000 minimum claim threshold applies across all frameworks (up from $5,000 for directions compensation), and cost recovery arrangements are better aligned.

Schedule 4 commenced on 29 October 2026 (incorporated in version 255 of the National Electricity Rules (NER)), with the remaining schedules commencing on 2 September 2027, 2 July 2028 and 3 June 2029.

Rule change request – Data centre contracting obligation for firmed energy

On 20 October 2026, the AEMC received a rule change request (ERC0461) from the Minister for Climate Change and Energy, the Hon Chris Bowen MP, to amend the NER to introduce a mandatory contracting obligation for firmed energy for data centres above a threshold size. The request implements recommendation 2 of the AEMC's advice to Energy Ministers, which the Energy and Climate Change Ministerial Council (ECMC) agreed to progress on 28 July 2026, and responds to AEMO forecasts that data centre consumption could reach around 34 TWh (13% of operational consumption) by 2035-36. Key proposed features include:

• Firming: data centres would need to show their load is backed by a portfolio of firm contracts, generation, storage and/or dependable demand flexibility in the same region, assessed against their full 24-hour load profile using RRO-style firmness concepts.
• Newness: firming would generally need to come from new resources (eg those reaching final investment decision or financial close after a set point), with a high default level that Ministers could vary for their jurisdiction.
• Compliance: the AER would assess compliance before connection, at scheduled reviews and on material load increases, with financial penalties and a possible 'turn-down' requirement for non-compliant data centres.

The AEMC has not yet initiated the request and will publish a consultation paper when it does.

Rule change request – Connections framework enhancements for integrated facilities, co-located plant and flexible loads

Also on 20 October 2026, the AEMC received a companion rule change request (ERC0462) from the Minister for Climate Change and Energy, the Hon Chris Bowen MP, to improve the NEM connections framework for data centres and other large loads that integrate or co-locate with existing generation or storage, or that offer demand flexibility. The request proposes to clarify and streamline the connection pathway for load co-located with existing plant and to allow demand flexibility to be recognised through the Chapter 5 connection process, complementing the contracting obligation above and the Government's earlier rule change requests on cost recovery for data centre network connections. The AEMC has not yet initiated the request and will publish a consultation paper when it does.

Consultation – Metering pathways for sites without telecommunications

On 22 October 2026, the AEMC published a consultation paper on AEMO's rule change request (ERC0408 and RRC0080) to streamline the process for installing manually read (type 4A) smart meters where telecommunications are unavailable. AEMO proposes replacing the current requirement to obtain an AEMO exemption with an obligation on metering coordinators to record why communications could not be established, share those records with the retailer (and AEMO and the AER on request) and establish remote communications as soon as practicable. The proposal supports the 2030 universal smart meter rollout and would not affect Victorian customers. Submissions close 17 December 2026, with a draft determination expected on 25 February 2027.

AER grants CPU ring-fencing waiver for hot water switching and EV charging pole leasing

On 27 October 2026, the AER granted CitiPower, Powercor and United Energy (CPU) a waiver from clauses 4.2.1 and 4.2.3 of the Ring-fencing Guideline (electricity distribution) until 30 June 2031, allowing CPU to use its existing offices, systems and customer channels to provide asset rental for EV charging infrastructure and hot water switching services, provided it processes negotiated service applications in the order received. Similar waivers were granted to Jemena and AusNet in September 2026.

AER updates the Better Resets Handbook

On 29 October 2026, the AER published targeted updates to its Better Resets Handbook, clarifying existing expectations without introducing new obligations or principles. The updates confirm that:

• consumer engagement is a key input but does not alone establish that a proposal is prudent, efficient or meets the Rules criteria;
• the early signal pathway may not suit every reset (particularly where material expenditure increases prevent a network from meeting the entry requirements), but remains available where circumstances support it; and
• revised proposals should respond to the draft decision and avoid new elements unless driven by a genuine change in circumstances beyond the network's control.

AER refuses Ergon Energy and Energex tariff structure statement amendments

On 30 October 2026, the AER refused Ergon Energy's and Energex's requests to amend their 2025–30 tariff structure statements to remove the planned optional three-part demand tariffs and flexible load tariffs for residential and small business customers. Under clause 6.18.1B(d) of the NER, a distributor must show an unforeseen event outside its control warrants the amendment, a high threshold the AER found was not met. The approved statements continue to apply, so Queensland retailers will have access to the optional demand tariffs from 1 July 2027 and flexible load tariffs from 1 July 2028.

AER cost pass throughs – AusNet determination and ElectraNet and Transgrid consultations

On 6 October 2026, the AER determined that the January 2026 bushfires in the Longwood and Walwa regions of Victoria were a natural disaster pass through event and approved a cost pass through amount of $4.6 million ($nominal, smoothed) for AusNet Services, to be recovered over the remaining four years of the 2026–31 regulatory control period. AusNet had proposed approximately $16.1 million. The AER estimates the bill impact at approximately $1 a year for residential customers and $2 a year for small business customers.

On 15 October 2026, the AER also opened consultation on two transmission cost pass through applications:

• ElectraNet: $18.6 million (nominal) in incremental capital and operating expenditure arising from the 17 October 2024 storm, which damaged 33 transmission structures across South Australia, with $3.8 million ($2023) in incremental revenue proposed to be recovered in 2027–28.
• Transgrid: a net positive pass through amount of $9.34 million ($June 2026) for 2025–26 network support costs, including payments for the Broken Hill and Riverina battery energy storage systems and the Broken Hill load banks and generators, to be recovered in 2027–28.

Submissions on both applications close 12 November 2026.

National Gas Rules

AER does not approve Victorian gas distribution reference service proposals for 2028–33

On 1 October 2026, the AER decided not to approve the 2028–33 reference service proposals of AusNet Gas Services, Australian Gas Networks (Victoria and Albury) and Multinet Gas Networks. The AER found the proposals inconsistent with the regulatory requirements because they classified the abolishment service as a reference service and included no access (gas meter) and incomplete meter fix service visits as services. The AER will now revise and publish the reference service proposals, and make decisions giving effect to the revised proposals.

Draft decision – Ring-fencing exemptions for AGN's hydrogen trial projects

On 16 October 2026, the AER published a draft decision to exempt Australian Gas Networks (AGN) from the ring-fencing obligations in sections 139 and 140 of the National Gas Law (NGL) for its Hydrogen Park South Australia and Hydrogen Park Gladstone trials, allowing AGN to operate the projects without a separate legal entity and share marketing staff. The exemptions would run from 30 November 2026 to 30 November 2031. Submissions close on 6 November 2026.

Other publications

Project EnergyConnect enters operational testing

On 1 October 2026, AEMO announced that Project EnergyConnect, the 900-kilometre ElectraNet and Transgrid interconnector linking South Australia, Victoria and New South Wales and creating the NEM's first transmission loop, had entered operational testing. Transfers will increase progressively, with full commissioning expected by the end of 2027. Loop-based settlement arrangements are scheduled to commence from 1 November 2026.

AEMO executive speeches – batteries, demand growth and the ISP

In October 2026, AEMO's CEO spoke at the 2026 AFR Energy and Climate Summit (13 October), and Executive General Manager System Design Nicola Falcon spoke at the Women in Energy and Renewables Summit 2026 (14 October) and the High Temperature Minerals Processing Forum (20 October). Key themes included:

• system resilience;
• grid-scale battery capacity doubling in 12 months to more than 9 GW, and a record 9.1 GW of new generation and storage connected last financial year;
• data centres forecast to grow from 3% to 13% of grid consumption by 2035-36; and
• the 2026 ISP's finding that NEM consumption could almost double to 390 TWh by 2050, with transmission-connected renewables firmed by storage and backed by gas remaining the least-cost pathway.

ACCC Gas Inquiry – September 2026 interim report

On 9 October 2026, the ACCC published its 30th Gas Inquiry interim report. East coast gas buyers contracted 51 PJ in the first half of 2026 for supply in 2027, more than double the volume contracted in the first half of 2025, and 43 PJ for supply in 2028. Average long-term contract prices for 2027 and 2028 supply remained steady at around $12 to $13/GJ, and most new agreements struck between April and June 2026 were at fixed prices rather than linked to international prices. The ACCC also found sufficient east coast supply to meet forecast demand in the near term.

Domestic Gas Reservation Bills introduced into Parliament

On 14 October 2026, the Federal Government introduced the Domestic Gas Reservation Bill 2026, the Domestic Gas Reservation Levy Bill 2026 and the Domestic Gas Reservation (Consequential Amendments) Bill 2026 into the House of Representatives, following the exposure draft package discussed in our September 2026 Update.

If passed, the Bills would introduce the following key features:

• Export licensing: from 1 January 2028, LNG exporters (the holder of legal title immediately before loading) must hold an export licence that is in force and not suspended, with civil penalties for breach.
• Domestic supply obligation (DSO): licence holders must supply the domestic market connected to their export facility with gas equal to 20% of their LNG exports from that market (or a lower percentage set by the Minister), adjusted down for existing contracts, infrastructure constraints, reservation arrangements and demand calibration, and up for non-"additional gas" acquisitions and prior shortfalls.
• Flexibility and additional gas: amendments to the Gas Market Code and new section 53WA of the Competition and Consumer Act 2010 (Cth) set out when a licence holder meets the flexibility requirements (eg best endeavours to sell uncontracted gas or exceptional circumstances) and allow the AER to set production baselines and approve additional gas that counts towards the DSO.
• Compliance and enforcement: licence holders need financial assurance, an AER-accepted compliance plan and annual reports, and face AER civil penalties, infringement notices, enforceable undertakings, audits and directions (including potential executive officer liability). Licences cannot be transferred and changes in control require ministerial consent.
• Gas Market Code and ADGSM: the Part 8 Ministerial exemptions framework is repealed, offer, negotiation and good faith rules are revised, ACCC information sharing with the AER and AEMO is expanded, and the ADGSM is repealed.
• Levy: licence holders will pay a cost recovery levy set by regulation, including while a licence is suspended.

The Senate referred the Bills to the Economics Legislation Committee on 15 October 2026, with a report due by 11 November 2026. On 29 October 2026, all three Bills passed the House of Representatives.

Battery projects drive record NEM connections pipeline

On 21 October 2026, AEMO's Connections Scorecard showed a record 80.9 GW of generation and storage projects in the connection process, up 43% year-on-year and exceeding the NEM's current 77 GW capacity. In the September quarter, 23 projects (4.5 GW) received application approval, four (1 GW) were registered and connected and seven (1.3 GW) reached full output. Batteries accounted for 5.8 GW (76%) of the 7.5 GW of new applications.

AEMO Quarterly Energy Dynamics – Q3 2026

On 23 October 2026, AEMO published its Quarterly Energy Dynamics report for Q3 2026. Key findings include:

• Prices: NEM wholesale prices averaged $63/MWh, down 27% year-on-year and 15% on Q2, the lowest September quarter since 2021, with year-on-year falls in every region (Victoria $56/MWh, Tasmania $56/MWh, Queensland $61/MWh, South Australia $69/MWh and New South Wales $74/MWh).
• Demand: underlying demand rose 1.3% to a record Q3 average of 25,471 MW, despite warmer winter conditions.
• Batteries: for the first time in any quarter, grid-scale batteries supplied more of the evening peak (8%) than gas-powered generation (5.1%), energy shifted by batteries more than tripled year-on-year, and batteries set the price in nearly half of dispatch intervals (up from 18%).
• Generation mix: renewables supplied a Q3 record 44.3% of NEM generation, while gas-powered generation fell 34% to its lowest Q3 average since 2000.
• East coast gas: wholesale gas prices averaged $10.77/GJ, 15% below Q3 2025, with gas demand for generation at its lowest Q3 level in 23 years.

AEMO consultation on revising the Guide to Registration Exemptions and Production Unit Classifications

AEMO has commenced a consultation on proposed changes to its Guide to Registration Exemptions and Production Unit Classifications Consultation (the Classification Guide) (AEMO Classification Guide Review).

AEMO's key proposed changes to the Classification Guide include the following:

• Introducing a self-declared exemption process for eligible systems less than 30 MW or 15M W for BESS (up from 5 MW).
• Expanding and clarifying the circumstances in which AEMO may consider exemptions for systems greater than 30 MW – this is not a discretion available to AEMO under the current version of the Classification Guide.

These represent a significant change for BESS systems and improve the regulatory settings for the development of production units in an embedded network and behind the meter production.

Submissions have supported these key changes and a redraft of the Classification Guide is expected to be published in December 2026.

NEM Review

NEM Review regulatory reforms – consultation closes and public webinars

As discussed in our September 2026 Update, DCCEEW released the draft regulatory package for the Electricity Services Entry Mechanism (ESEM), the Market Making Obligation (MMO) and price responsive resource visibility. Consultation closed on 13 October 2026, and recordings of public webinar 2 and webinar 3 are available. These webinars reinforced positions that we set out in our paper on the draft legislation (The ESEM is coming).

Energy Ministers will consider the National Electricity Law changes in December 2026, with the Bill expected in the South Australian Parliament in 2027 and a second-pass NER consultation in early 2027.

ESEM Contract Design

Submissions on the Electricity Contract Co-Design Working Group's (Working Group) Industry-led Electricity Contract Co-Design Consultation Paper closed on 2 October 2026.

The Working Group published a summary of the submissions (ESEM contract consultation summary) on 15 October 2026. The key findings were:

• General support for the Regional Reference PPA and cap contract structures.
• There was a significant lack of support for the proposed Dynamic Time of Day Block Spread Swap, especially the dynamic block setting approach underpinning the swap.
• Uncertainty as to how hybrid projects would be dealt with under the contracts.
• How the "Reference Fleet" is determined for the Regional Reference PPA remains an unresolved issue.
• Force Majeure provisions should not be managed through the ESEM contracts but require a mechanism for bankability – there is a genuine debate about who should bear this risk. The Working Group recognises that single asset projects will not be able to manage the impacts of Force Majeure without some relief under the product or support from an alternative product.

Western Australia

Wholesale electricity market

Procedure Change Report – WEM Procedure: Monitoring Protocol

On 12 October 2026, the Economic Regulation Authority (ERA) published the Procedure Change Report (EEPC_2026_02) for the WEM Procedure: Monitoring Protocol. The WEM Procedure: Monitoring Protocol outlines how the ERA implements its obligations under the Electricity System and Market Rules (ESM Rules) to monitor Rule Participants' compliance with the ESM Rules and WEM Procedures (clause 2.15.2 of the ESM Rules).

Key amendments to the WEM Procedure: Monitoring Protocol include:

• clause 4.1.3 has been amended to clarify that a Market Participant is not required to self-report an alleged breach in respect of non-compliance or suspected non-compliance with a Registered GPS, GMP or Rectification Plan for its Transmission Connected Generating System to AEMO only (under the self-reporting regime defined in rule 3A.10 of the ESM Rules and in accordance with AEMO's WEM Procedure: GPS Compliance Tests and Generator Monitoring Plans) and that all other suspected breaches of Chapter 3A of the ESM Rules must be self-reported to the ERA (including suspected related breaches of any other ESM Rule or WEM Procedure caused by non-compliance or suspected non-compliance with a Registered GPS, GMP or Rectification Plan);
• clause 4.3.1 has been amended to clarify that the ability of a Rule Participant (other than AEMO) to inform the ERA of suspected breaches by another Rule Participant includes breaches of clauses in Chapter 3A of the ESM Rules;
• clause 5.3.3 has been amended to clarify that the ERA may contact the reporting party to seek clarification or further information;
• clause 5.5.1 has been amended to require that if the ERA decides to investigate an alleged breach, it must notify the Rule Participant as soon as practicable after commencing the investigation; and
• clause 8.6.3 has been amended to clarify that a civil penalty order sought by the ERA can be up to the maximum civil penalty amount prescribed in Schedule 1 of the ESM Regulations and that the ERA can seek cancellation of the Rule Participant's registration in the WEM.

The updated WEM Procedure: Monitoring Protocol came into effect on 2 November 2026.

Proposed amendments to WEM Procedure: Dispatch Algorithm Formulation

AEMO has published a Procedure Change Proposal to amend the WEM Procedure: Dispatch Algorithm Formulation (WEM Procedure) to reflect urgent changes made to the Dispatch Algorithm in accordance with clause 7.2.3 of the ESM Rules and to undertake process improvements.

Amendments to the WEM Procedure are considered by AEMO to be required to improve how the Dispatch Algorithm operates, to:

• change how Facilities are treated so that the relevant Frequency Co-optimised Essential System Services (FCESS) trapezia are respected; and
• address potential violations of safe limit and contingency constraints.

As part of the proposal, AEMO has also proposed amendments that seek to manage emerging or potential dispatch issues it has observed.

The proposed amendments to the WEM Procedure will:

• revise the Constraint Violation Penalties following changes to the Dispatch Algorithm in accordance with clause 7.2.3;
• provide more accurate estimates of a Facility's potential Droop Response in the Essential System Service pre-processing calculation;
• align the WEM Procedure with current system functionality regarding when Enablement Limits for the Rate of Change of Frequency (RoCoF) Control Service are relaxed in Pre-Dispatch Intervals;
• limit fluctuations in the RoCoF Control Service Requirement where the costs of both the RoCoF and Contingency Raise services are zero; and
• implement initial recommendations from the Coordinator of Energy's WEM Procedure Content Review that do not require additional consultation or implementation delay.

The consultation period closes on 13 November 2026. The Procedure Change Report is expected to be published on 25 November 2026 and commencement of the amended Procedure is proposed to occur immediately at the same time.

Draft Alternative Electricity Services Compliance and Enforcement Guide

The ERA is seeking public comment on the draft Alternative Electricity Services (AES) Compliance and Enforcement Guide (Guide). The draft Guide outlines the ERA's proposed approach to promoting, monitoring and enforcing compliance with the AES framework comprising the Electricity Industry Act 2004 (WA), the Electricity Industry (Alternative Electricity Services) Regulations 2026 (WA) and the AES Code of Practice (AES Code).

Under the AES framework, onsite power supply (OPS) and single property network (SPN) service providers will need to register with, and pay an annual fee to, the ERA and comply with the AES Code. Compliance is required from 1 February 2027 for OPS providers and 1 July 2027 for SPN providers. Providers that supply small-use customers (those using no more than 160 MWh a year) will also be required to join the Energy and Water Ombudsman WA Scheme.

The ERA describes its intended compliance approach as outcomes-focused and risk-based. The ERA intends to prioritise higher-risk obligations for vulnerable customers, but will also investigate repeated low-risk breaches where they point to systemic issues. The ERA has the ability to appoint an auditor and recover the reasonable costs of the auditor from a provider. The draft Guide indicates that the ERA expects regular compliance audits to be unlikely and would always follow engagement with the registration holder (to the extent practicable), unless providers are unwilling or unable to cooperate with the ERA in any investigation.

Enforcement is proposed to follow a staged approach, which will include the ERA issuing a notice of contravention requiring the breach to be fixed within a set period as the first step. Depending on the contravention, the ERA will have a range of enforcement options, including enforceable undertakings, actions to ensure non-compliance is rectified, and monetary penalties.

Public consultation on the draft AES Compliance and Enforcement Guide closes on 19 November 2026 at 4:00 PM (AWST).

Material Portfolio Assessment

The ERA has completed its Portfolio and Material Portfolio Assessment as required under the ESM Rules and identified 38 Portfolios and five Material Portfolios, up from 34 and four respectively in 2025.

This is the first assessment under the revised WEM Procedure: Portfolio Assessment, which took effect on 1 July 2026. Eight Market Participants have Facilities in a Material Portfolio, the same number as in 2025.

Material Portfolios are subject to additional record-keeping and monitoring requirements, while the Portfolio allocations feed into the ERA's quarterly assessment of Material Constrained Portfolios (which looks at market power behind network constraints).

Market Participants should note that any change in a Facility's registration, ownership or control may now trigger an update to its Portfolio.

Three Market Participants failed to provide a Declaration of Control by the 1 August 2026 deadline as required under the ESM Rules and have been referred to the ERA's Compliance and Enforcement team.

Review of the Non-Co-optimised Essential System Services (NCESS) Framework

The NCESS framework provides a procurement mechanism for services that are not otherwise available, to ensure Power System Security and Power System Reliability requirements are met. The review was completed on 10 March 2026 and recommended:

• a truncated procurement process that allows Western Power to use the NCESS flexibly and efficiently for Network Support Services (NSS) that are repetitive;
• removal of barriers to NSS provided through aggregated distribution-connected Electric Storage Resources; and
• increased support for NSS necessary for regional reliability by providing details on registration requirements.

DEED sought stakeholder feedback on the Exposure Draft of proposed amendments to the ESM Rules (Amending Rules) to implement the outcomes of the review, which closed on 29 October 2026. DEED will now consider stakeholder submissions and finalise the Amending Rules before submission to the Minister for Energy.

FESO 2027

The Future Energy System Outlook (FESO) is a scenario-based study led by DEED that aims to support government and private sector planning and infrastructure investment in the South West Interconnected System (SWIS) to 2050. The study, which DEED expects to complete in 2027, is based on scenarios that show how electricity demand, generation, storage, networks, system operations and supply may evolve over time in order to predict potential needs, risks and opportunities.

The FESO will fulfil the system planning requirements of a Whole of System Plan under section 4.5A of the ESM Rules. The FESO may also inform which projects are identified as Priority Projects under the ESM Rules. However, being identified in the FESO will not approve or commit any investment.

DEED must complete FESO 2027 by 30 September 2027.

Draft Methodology, Inputs, Scenarios and Assumptions (MISA) and accompanying Inputs and Assumptions Consultation

DEED ran a public consultation between 9 and 30 October 2026 on the draft Methodology, Inputs, Scenarios and Assumptions (MISA). The draft MISA, which was prepared with Western Power, AEMO and specialist advisers, sets out the modelling framework, the scenarios, the principal assumptions and the methods to be used in FESO 2027. The draft MISA proposes that the modelling will be undertaken under three scenarios reflecting potential ways in which the SWIS could develop to 2050 and will include a commerciality assessment. The Central scenario represents a steady transition where current policies and plans continue. The Rapid Change scenario represents circumstances where growth is stronger and electrification and technology uptake is faster, with limited infrastructure delivery restrictions. The Constrained scenario represents slower growth and electrification, with greater infrastructure delivery constraints.

Key input and investment options represented as assumptions in the modelling proposed in the draft MISA include:

• State-owned and private coal retirement are assumed to proceed;
• phase 1 projects identified in the South West Interconnected System Transmission Plan are assumed to proceed;
• fuel price assumptions and material gas availability and deliverability constraints are applied to gas-powered generation (varying between scenarios); and
• Central and Rapid Change include annual SWIS emissions budgets that decline over the modelling period.

The commerciality assessment will compare projected market revenues with the costs of developing and operating the investment, however will not model bilateral contracts, hedging arrangements, renewable energy certificates and network support agreements.

Data centre assumptions reflecting different levels of potential growth were specifically put out for feedback given "significant uncertainty regarding future data centre development". DEED has indicated there may be changes to assumptions during the modelling phase, including where there are material changes in external factors. DEED sought stakeholder feedback on the draft MISA to identify material gaps, inconsistencies or issues prior to finalising the MISA. Consultation closed on 30 October 2026 and DEED aims to publish the final MISA by mid-November 2026.

WA Gas

Independent Panel Report on the ERA's Draft Gas Rate of Return Instrument published

In Western Australia, the ERA determines the allowed rate of return on service providers' projected capital bases for regulated gas pipelines. The Gas Rate of Return Instrument sets out the methodology used to calculate the rate of return, and the ERA is required to review and replace the instrument every four years. As part of this review process, the ERA's draft instrument is referred to the Independent Panel, which assesses whether it is supported by sound reasoning such that it is capable of promoting achievement of the national gas objective.

The ERA published its Draft 2026 Gas Rate of Return Instrument on 28 July 2026. On 6 October 2026, the ERA published the Independent Panel's Report on the Draft 2026 Gas Rate of Return Instrument (Report).

The Report recommended that the ERA:

• incorporate a sensitivity analysis of network revenue and customer bill impacts for proposed parameter changes;
• explore whether there is a mechanism to address the limitations of the current domestic comparator sample prior to making the final decision (for example, by including unlisted domestic energy networks to incorporate a longer sampling period);
• consider the weight placed on the equity beta estimates, especially where they are based on one entity;
• revisit the evidence on the equity beta and be aware of potential bias;
• include further analysis of the materiality of adopting a non-zero debt beta;
• analyse a zero-transition option within the instrument while allowing affected service providers to seek compensation for the transition costs;
• model consumer costs of continued exposure to the issue in different transition periods against the actual costs of unwinding real financing arrangements;
• test a targeted, evidenced, business-oriented transition option while correcting identified evidence deficiencies; and
• revisit the approach to rounding and whether there are alternatives to address the reliability of distribution and utilisation rate estimates.

The ERA will consider the Report, together with stakeholder submissions on the Draft 2026 Gas Rate of Return Instrument, before making its final determination.

The final 2026 Gas Rate of Return Instrument is required to be published by December 2026 and will apply as a binding instrument to all regulatory determinations made while it is in force.

Gas Services Information Rules Review – further consultation on improving coordination between pipeline operators and AEMO

The Coordinator of Energy (Coordinator) and the Gas Advisory Board (GAB) are reviewing the Gas Services Information Rules (GSI Rules) following the inquiry into the WA Domestic Gas Policy (Inquiry) and proposed changes to the National Gas Law as it applies in WA, the National Gas Access (WA) Law (NGL(WA)). The purpose of the review is to propose amendments that will implement recommendations from the Inquiry, enable consistency with the NGL(WA) and identify other aspects of the GSI Rules that may need amendment.

On 15 December 2025, the Coordinator published an initial consultation paper with proposed outcomes of the review of the GSI Rules framework. Submissions closed on 9 February 2026. The consultation included proposals for:

• formalising improvements to the WA Gas Statement of Opportunities (GSOO);
• amending definitions to address inconsistencies in how information is reported;
• improving accuracy of information reporting by adopting National Gas Law reforms;
• introducing a public register for the ERA's investigations; and
• increasing awareness of gas reporting obligations.

On 28 October 2026, DEED published the Coordinator's information paper with the review outcomes of the initial consultation paper. The review outcomes on the initial consultation paper include:

• formalise improvements to the GSOO;
• amend the GSI Rules definitions to resolve reporting inconsistencies;
• increase the accuracy of information reporting by implementing the NGL reforms;
• establish a public register for the ERA's investigations; and
• introduce a link to the WA Domestic Gas Statement to enhance awareness of reporting obligations.

On 25 August 2026, AEMO was required to intervene in the WEM Real-Time Market to dispatch gas-powered generation to maintain power system supply, highlighting the growing interdependence between the WEM and gas pipelines operations. In response, on 28 October 2026, DEED published a further consultation paper on improving coordination between gas pipeline operators and AEMO, as part of the ongoing review of the GSI Rules to include additional outcomes. The paper seeks views on:

• AEMO providing WEM information to pipeline operators daily to support pipeline operations;
• pipeline operators providing gas pipeline information to AEMO on request, to assist AEMO in maintaining WEM reliability;
• AEMO notifying pipeline operators of any low reserve condition declared in the WEM, as early warning that GPG consumption may change;
• pipeline operators notifying AEMO if gas supply to registered large users in the electricity consumption category may be curtailed or unmet; and
• AEMO advising the Coordinator if it considers an emergency management facility direction is required while the WEM is in an emergency operating state, to prevent cascading problems across the energy sector.

Submissions close on 25 November 2026. Submissions should be emailed to energymarkets@deed.wa.gov.au. All submissions will be published unless confidentiality is requested.

WA adoption of National Gas Law – Gas Pipelines Package

The WA Government has confirmed it will adopt the national Gas Pipelines Package (Package).

The Package aims to:

• enable better access to pipelines that do not currently provide access, while lowering costs and risks;
• constrain the use of market power by pipeline service providers;
• increase transparency, price information and dispute resolution mechanisms to support commercial negotiations between pipeline service providers and shippers;
• establish reporting frameworks for stand-alone compression and storage facilities; and
• streamline governance arrangements.

The Package commenced in other Australian jurisdictions in March 2023. In October 2026, DEED released a consultation paper seeking feedback on how the Package is implemented in WA.

The Package is proposed to be adopted through three instruments:

• a Ministerial adoption Order;
• amendments to the National Gas Access (WA) (Act Amendment) (Gas Pipelines) Regulations, to adapt the national provisions for WA; and
• amendments to the National Gas Access (WA) (Part 3) Amendment (Gas Pipelines) Regulations, to implement the equivalent national regulations in a WA context.

The central change achieved by the adoption of the Package is that WA's three categories of pipeline (full regulation, light regulation and non-scheme) will become two: scheme and non-scheme pipelines. Scheme pipelines will be subject to stronger regulation, with ERA-approved reference tariffs and a regulatory dispute resolution process. Non-scheme pipelines will be subject to lighter regulation under Part 23 of the rules, based on information disclosure and commercial arbitration. The Kalgoorlie to Kambalda Pipeline is the only light regulation pipeline in WA, and it will become a non-scheme pipeline.

The existing coverage test will be removed. Decisions on which form of regulation applies to pipelines will move from the National Competition Council and the relevant Minister to the ERA. The ERA will be able to initiate a review of the designation of a pipeline itself or on application by an interested party.

The ERA will be able to grant a "greenfields incentive determination", which exempts a new pipeline that is "unlikely to have substantial market power" for up to 15 years. It may also grant a "greenfields price protection determination", fixing prices and terms for the period of the greenfields incentive determination.

Increased information disclosure requirements will apply to operators of all scheme pipelines and non-exempt non-scheme pipelines must publish standing terms, information on service availability and usage, historical financial and demand data, their cost allocation methodology, a user access guide and the actual prices shippers pay.

Stand-alone compression and storage facilities will be required to publish standing terms and the actual prices users pay to align the transparency and reporting requirements with those that apply to pipeline service providers. To achieve this, the relevant rules (contained in Part 18A) will be inserted into Western Australia's National Gas Rules but will not initially apply in WA. The application of Part 18A in WA depends on activating provisions under rule 198C which has never occurred. DEED intends to ask the Australian Energy Market Commission to remove rule 198C and to insert WA-workable definitions of "gas storage facility" and "stand-alone compression service facility".

Submissions close on 9 December 2026. Submissions should be emailed to gasnetworkpolicy@deed.wa.gov.au using DEED's feedback template, supported by evidence of direct impacts where possible.

Changes to the funding regulations for the ERA and the WA Energy Disputes Arbitrator are the subject of a separate consultation (Gas Access Funding Regulations and Local Provisions Regulations Consultation) covered below.

Proposed changes to the Gas Access Funding Regulations and Local Provisions Regulations

To support WA's planned adoption of the Gas Pipelines Package (and the Other Gases Package, another national reform package which DEED intends to consult on later in the year) DEED has released a consultation paper seeking stakeholder feedback on proposed amendments to the Economic Regulation Authority (National Gas Access Funding) Regulations 2009 (WA) and the National Gas Access (WA) (Local Provisions) Regulations 2009 (WA).

Among other things, proposed amendments remove the Kalgoorlie to Kambalda Pipeline from the scheme pipeline cost recovery arrangements, revise the methodology for allocating standing charges among scheme pipelines, and introduce new cost recovery frameworks for the ERA's expanded functions, including non-scheme pipelines and Part 18A facilities.

Submissions close on 25 November 2026. Submissions should be emailed to gasnetworkpolicy@deed.wa.gov.au. A submission feedback template with 12 questions is provided by DEED to assist stakeholders to prepare their feedback.

Authors: Dale Gill, Partner; Paul Newman, Consultant; Lauren Zambotti, Counsel; Isabelle Jardine, Graduate; Natalie Doray, Graduate; Vanessa Robinson, Graduate; Nikhil Kaniyur, Paralegal and Sow Nagendran, Paralegal.