What you need to know
September delivered a packed month for Australian energy regulation.
- The ESEM is definitely coming – we saw:
- the publication of the draft regulatory package to establish the ESEM and the MMO; and
- the publication of the draft ESEM Contracts.
- The Domestic Gas Reservation Scheme is on its way – the exposure draft legislation for a new LNG export licensing regime has been released.
- Network reform is in the spotlight – the Electricity Network Regulation Review continues and the AEMC is consulting on cost recovery for network augmentations for data centres.
Highlights for September 2026
In this update, we take a look at the latest rule changes and market updates published in September 2026, which affect participants in the Australian electricity and gas markets.
National Electricity Market
National Electricity Rules
AEMC Electricity Network Regulation Review – public forum and Package 2 consultation paper
On 18 August 2026, the AEMC held a public forum as part of its Electricity Network Regulation Review which included presentations on Energy Networks Australia’s rule change (ERC0437) proposing to enable distribution network service providers to install, own and maintain kerbside electric vehicle (EV) charging infrastructure and Nexa Advisory’s rule change (ERC0435) proposing to strengthen the ring-fencing framework.
Key themes were broad stakeholder support for clearer guidance on the boundary between regulated and contestable services, calls for improved network data transparency and standardised connection processes, and a widely held view that the framework’s capital expenditure bias needs to be addressed. The pending distribution system operator rule change was identified as a significant factor likely to reshape outcomes across both packages.
The AEMC also released a consultation paper for Package 2 at the forum, identifying ten issues for further investigation across three themes: the revenue determination process, incentives, and risk allocation and compensation. A follow-up forum is expected later in 2026 for Package 1 recommendations, with further engagement on Package 2 options in early 2027.
AER approves new MLO exchange and new MLO products
On 4 September 2026, the AER approved TOD Markets Pty Limited as a Market Liquidity Obligation (MLO) exchange, alongside the existing ASX 24. The AER has also approved six new MLO products: morning and evening peak electricity futures on ASX 24, and a flat day swap, evening peak swap, $300 flat cap and $600 flat cap on TOD Markets.
Consultation Paper – Power System Modelling Strategy
On 16 September, AEMO released a Consultation Paper on the Power System Modelling Strategy currently being developed in response to the significant changes to Australia's power system. The strategy will shape the long-term direction of and plan for power system modelling across both the National Electricity Market (NEM) and the Wholesale Electricity Market (WEM).
AEMO is accepting submissions on the Consultation Paper by 5:00pm (AEST) on 14 October 2026 by submitting comments in PDF format to modelling@aemo.com.au.
AER consults on draft network resilience guidelines
On 17 September 2026, the AER published its draft network resilience guidelines for consultation. The guidelines set out how distribution network resilience expenditure will be assessed under the National Electricity Rules. The AER is required to publish the final guidelines by 1 December 2026. Submissions close 15 October 2026.
Draft rule – Facilitating EV charging infrastructure rollout under Commonwealth grants
On 24 September 2026, the AEMC released a draft rule (ERC0436) to enable the rollout of EV charging infrastructure under the Commonwealth Government’s $40 million Accelerating EV Charging Program.
Under the draft rule, participating distributors must facilitate private charge point operators providing kerbside EV charging in high-density areas through efficient connection and access requirements, and act as the supplier of last resort where charge point operators do not take up identified sites. Participating distributors will also be required to be the supplier in regional blackspots. The Commonwealth will fund approximately 30% of the cost of eligible infrastructure. Submissions close 5 November 2026, with a final determination due by the end of 2026.
Rule change request – Cost recovery for network augmentations – data centres
On 24 September 2026, the AEMC published a consultation paper on two rule change requests from the Hon Chris Bowen MP seeking to ensure data centres and other large loads make an appropriate contribution to network costs they cause or accelerate when connecting to the NEM.
The rule change requests were first lodged in July 2026, as discussed in our article Australian electricity and gas markets – July 2026 Update, and form part of the AEMC’s broader data centre work program alongside the AEMC’s advice to the Energy and Climate Change Ministerial Council (ECMC) (discussed in our article Australian electricity and gas markets – August 2026 Update).
Consultation questions cover topics including:
- whether network augmentation costs caused by a large load connection are allocated to the connecting party in appropriate circumstances;
- the risk that consumers may pay for stranded assets if expected large load demand does not proceed or uses less capacity than anticipated;
- whether loads connecting to transmission networks are required to pay jurisdictional scheme costs; and
- whether limited public information about existing and future large loads makes demand forecasting and network planning more difficult.
Submissions on the consultation paper close 5 November 2026. A draft determination is due by 1 April 2027.
National Energy Retail Rules
New rule – Streamlining payment difficulty protections
On 10 September 2026, the AEMC made a new rule strengthening protections for energy customers struggling to pay their bills. Key changes include:
- strengthened protections for customers at risk of disconnection, including requiring retailers to make contact through at least two communication channels;
- clearer and more consistent rules around when disconnection protections apply, reinforcing disconnection as a last resort;
- simpler eligibility categories for payment difficulty protections; and
- clearer payment assistance information on retailer websites, reminder notices and disconnection warning notices.
The AEMC has also published a separate draft rule that would ban retailers from requiring proof of a customer’s financial circumstances before providing assistance. Submissions on the draft rule close 22 October 2026. The final rule comes into effect on 30 March 2027.
AER releases draft DMO guidelines
On 18 September 2026, the AER released its draft Default Market Offer (DMO) guidelines for consultation, which set out the proposed methodology for annual DMO determinations beginning 2027–28. From next year, the annual DMO issues paper will be replaced by a more targeted request for comment on specific issues where needed. Submissions close 16 October 2026. The final guidelines must be published by 1 December 2026.
National Gas Rules
AEMC publishes draft determination – Gas networks in transition
On 27 August 2026, the AEMC published a draft determination and draft rule for the Gas networks in transition rule change project. The draft rule proposes updates to the gas pipeline economic regulatory framework to support efficient decision-making in a changing energy system, including requiring gas service providers to prepare a 20-year long-term outlook for their networks, reforms to expenditure and capital cost recovery provisions, and improved recognition of competition from alternative energy services. Submissions close 8 October 2026, with a final determination expected in December 2026.
Other publications
Domestic Gas Reservation Scheme – exposure draft legislation released
On 10 September 2026, the Federal Government released exposure draft legislation for the Domestic Gas Reservation Scheme (DGRS). The exposure draft package comprises three Bills:
- the Domestic Gas Reservation Bill 2026;
- the Domestic Gas Reservation Levy Bill 2026; and
- the Domestic Gas Reservation (Consequential Amendments) Bill 2026.
The DGRS will establish a new export licensing regime requiring liquefied natural gas (LNG) exporters to hold an export licence from 1 January 2028, with applications accepted from 1 January 2027. Licence holders will be subject to a Domestic Supply Obligation (DSO) requiring a prescribed percentage of gas production to be offered to the domestic market. The new export licensing and compliance regimes will be administered by the AER, representing a significant expansion of its regulatory remit. The legislation follows the Government’s Gas Market Review, finalised in December 2025, and the draft Design Framework consultation which closed in June 2026. Consultation on the exposure drafts closed 24 September 2026.
Industry concerns include:
- the DSO and demand calibrated quantities should be set for five-year periods rather than the proposed one-year regulatory periods to support long-term contracting and investment certainty;
- the scheme should better recognise the value of flexibility services (such as put and call options) provided by exporters to the domestic market;
- there should be greater clarity about the respective roles of the Minister and the AER;
- the oversupply target should be set cautiously as the east coast market may have limited capacity to absorb additional gas; and
- a number of key elements of the scheme, including the AER’s methodology for setting demand calibrated quantities and the transparency rules, remain undeveloped and should be consulted on promptly.
NEM Review
ESEM Contract consultation
The Electricity Contract Co-Design Working Group (Working Group) has released its consultation paper on the proposed Electricity Services Entry Mechanism (ESEM) contracts.
Submissions are due by Friday 2 October 2026. The Working Group has asked for responses on a series of consultation questions and established a response portal.
See our review of the draft ESEM Contracts in our article What the ESEM contracts could look like – have your say.
ESEM regulatory package released for consultation
On 14 September 2026, the Department of Climate Change, Energy, the Environment and Water (DCCEEW) released the draft regulatory package to establish the ESEM and the Market Making Obligation (MMO). Consultation closes on 13 October 2026. See our review of the package in our article The ESEM is coming.
Western Australia
Capital Charges Scheme: Impact on Connections to Existing Transmission Infrastructure
The Department of Energy and Economic Diversification (DEED) consulted on the State Government’s Capital Charges Scheme (Scheme), which will apply to renewable generation and storage projects seeking new or expanded connections of 10 MW or more to the existing South West Interconnected System (SWIS) transmission infrastructure.
The Scheme will replace existing project-specific shared asset contributions with a fixed capital charge of $100,000 per MW. It applies to projects connecting to existing infrastructure and the Clean Energy Link, and is intended to provide greater certainty on shared network costs.
Consultation closed 7 September 2026. We will continue to monitor for further developments.
Amendments to the Electricity (Standard Products) Wholesale Arrangements 2014
The Electricity (Standard Products) Wholesale Arrangements 2014 (Wholesale Arrangements) is an instrument created under the Electricity Corporations (Electricity Generation and Retail Corporation) Regulations 2013 (WA) which was introduced to mitigate the potential effects on competition in the WEM as a result of the merger between Verve and Synergy.
The Wholesale Arrangements specify the 'Standard Products' that Synergy is required to offer and the minimum quantities that must be made available. They were last amended in August 2024.
The ERA recommended three amendments to the Wholesale Arrangements in its 2025 review of the effectiveness of the regulatory scheme applying to Synergy, including to:
- require Synergy to publish further detail on its standard product pricing method;
- rectify an error introduced in 2023 to ensure that Synergy is restricted from offering buy-side standard products to entities with market power; and
- update outdated references across the instrument.
DEED consulted on an Exposure Draft to implement these recommendations. The Minister for Energy then made the amendments to the Wholesale Arrangements, which came into effect on 30 September 2026.
More details and an unofficial consolidated version of the Wholesale Arrangements are available on the WA Government website.
2026 Draft Gas Rate of Return Instrument
The ERA published the 2026 Draft Gas Rate of Return Instrument and accompanying Explanatory Statement.
The draft gas instrument sets out the ERA’s draft position on determining the allowed rate of return on capital for regulated gas network service providers. The Explanatory Statement attachments provide the ERA’s reasoning for the positions set out in the draft instrument. The draft gas instrument and accompanying Explanatory Statement will be subject to a review by the Independent Panel. The Independent Panel’s report will be published when it becomes available.
The ERA invites stakeholder submissions on the draft instrument until 14 October 2026 via its Current Consultations webpage.
Material Constrained Portfolio Assessment – Q2 2026
The ERA has completed its Material Constrained Portfolio Assessment under the ESM Rules for the second quarter of 2026 and identified three Material Constrained Portfolios, based on data from 1 April to 1 July 2026.
Affected Market Participants have been notified, and these portfolios are now subject to additional record-keeping and monitoring requirements.
2026 Review of the Code of Conduct for the Supply of Electricity to Small Use Customers 2022
The ERA received the Electricity Code Consultative Committee’s (ECCC’s) Draft Review Report for the 2026 review of the Code of Conduct for the Supply of Electricity to Small Use Customers 2022 (Code).
As part of its review, the ECCC sought feedback on four areas of change to retailers’ obligations in relation to:
- Overpayments and overcharging: Differentiating overpayments from overcharging and requiring retailers to respond consistently, reach out to customers promptly and be responsive to the customer’s choice when returning outstanding money.
- Bulk downloads of consumption data: Introducing a new obligation on retailers to make bulk downloads of consumption data available to all small use customers.
- Improving protections for vulnerable customers: Improving protections for customers experiencing family violence by restricting debt referral and removing the currently very limited ability for retailers to request written evidence of family violence. Increasing the obligation on retailers to provide training on family violence to staff. Allowing any customer to request additional account protections.
- Pre-payment meters: Requiring retailers to offer more than one recharge (or payment top-up) option to pre-payment meter customers.
The ECCC will consider feedback received during the public consultation before providing its final review report to the ERA in late November 2026. The ERA will refer any proposal to amend the Code to the ECCC in early 2027 for advice. The ECCC will conduct additional public consultation before providing final advice to the ERA. Any amendments to the Code are likely to take effect from 1 January 2028.
2026 Benchmark Technology Review – Draft Determination for consultation
On 9 September 2026, DEED published the 2026 Benchmark Technology Review Draft Determination for consultation.
The Coordinator of Energy (Coordinator) must determine the Benchmark Technologies used to set the Peak and Flexible Benchmark Reserve Capacity Prices (BRCPs) within six months of a revised Electricity Storage Resource (ESR) duration requirement being published by AEMO in the Electricity Statement of Opportunities (ESOO).
In the 2026 ESOO published by AEMO on 23 June 2026, the ESR duration requirement changed from six hours to seven hours.
The Coordinator must select the Benchmark Technologies on the basis that they are expected to deliver the relevant capacity service at the lowest annual fixed cost, including annualised capital costs and fixed operating and maintenance costs.
The proposed Benchmark Technologies for the Peak and Flexible BRCPs in the Draft Determination are an E-Class simple cycle gas turbine certified on distillate, with preference to run on gas when practical, connected to an unconstrained network node on the Clean Energy Link North. The Draft Determination also proposes to retain a gross cost of new entry (CONE) approach to determine the BRCPs.
Stakeholders are invited to provide feedback on the Draft Determination before 5:00pm (AWST) on Wednesday 9 October 2026 by submitting comments to energymarkets@deed.wa.gov.au.
Consultation on Exposure Draft of Electricity System and Market Amending Rules to implement outcomes of the Operational Forecasting Review
DEED published a Consultation Paper in July 2025 as part of the review to identify and recommend near-term improvements to AEMO’s operational forecasting processes. The Consultation Paper proposed changes to:
- improve AEMO’s forecasting processes and documentation (Proposals 1-3);
- make AEMO responsible for intermittent generation forecasting (Proposal 4);
- require AEMO to regularly publish forecast accuracy metrics (Proposal 5); and
- require the operators of large loads to provide forecasts related to their operation to AEMO (Proposal 6).
DEED considered all stakeholder submissions on the Consultation Paper and revised the initial proposals to address the stakeholder feedback.
In August 2026, DEED published an Information Paper which sets out the final review outcomes for Proposals 1-5. DEED considers that further consideration is required on Proposal 6 and intends to publish a separate consultation paper on this proposal in due course.
Implementation of the final review outcomes for Proposals 4 and 5 requires amendments to the ESM Rules. DEED published an Exposure Draft of the proposed ESM Amending Rules for public consultation to make AEMO responsible for intermittent generation forecasting and require AEMO to regularly publish forecast accuracy metrics.
Capability Class 2 Technologies Review – Information Paper
On 30 September 2026, DEED published the Coordinator's Information Paper that presents the outcomes of the Capability Class 2 Technologies Review to improve the operation of Capability Class 2 Technologies in the WEM, including the Reserve Capacity Mechanism (RCM).
The outcomes set out in the Information Paper include:
- allowing AEMO to accurately measure ESR performance in a Reserve Capacity Test;
- changes to Demand Side Programme (DSP) availability obligation intervals to 8:00am to 12:00pm and 2:00pm to 10:00pm on Business Days;
- allowances for reduction in DSP Capacity Credits if large associated loads cease operations; and
- specific ESR state of charge obligations during Lack of Reserve events, and additional Capacity Credit Refund provisions during periods when these specific obligations apply.
Following the Information Paper, DEED will develop draft ESM Amending Rules to implement the outcomes, for consultation.
AEMO Calls for Submissions for the System Restart Service in the North Metro Sub-network of the SWIS
AEMO has issued a Call for Submissions from Market Participants to provide a System Restart Service (SRS) for the North Metro sub-network of the SWIS, to ensure continuity of System Restart Services following contract expiry. An SRS enables generating facilities to start without external power supply and supports re-energisation of the network following a major disruption.
Tender submissions must be provided via VendorPanel in accordance with the tender guideline by 5:00pm (AWST) on 13 October 2026.
Enquiries may be submitted to wa.srs@aemo.com.au, and Western Power enquiries should be directed to network.access@westernpower.com.au. Further information and full tender documentation are available on the AEMO website.
Commencement of amended AEMO WEM Procedures
Changes to six WEM Procedures that AEMO is responsible for were finalised in September. The revised WEM Procedures are:
- WEM Procedure: Network Access Quantity Model. The revised procedure avoids reductions in the Network Access Quantities of a Scheduled Facility or a Semi-Scheduled Facility when the Facility is not contributing to network congestion. More details can be found in the WEM Procedure Change Report.
- WEM Procedure: Rule Participant Registration Processes. The amendments update AEMO's contact details, provide more details on decision-making timeframes and include more information in the exemptions section regarding the criteria for exemptions and the process. The amendments also streamline the application process for Market Participants and are intended to reduce the administrative burden for Market Participants when deregistering. More details can be found in the WEM Procedure Change Report.
- WEM Procedure: Capacity Credit Allocations. The amendments arose from the review of the RCM in 2025 and commencement of Schedule 3 of the Wholesale Electricity Market Amendment (RCM Reviews Sequencing) Rules 2025. The changes include:
- clarifications of AEMO's obligations;
- updates to defined terms that reflect changes to the ESM Rules and the Capacity Credit Allocation procedure;
- removal of the Transitional Provisions;
- additional detail to the Wholesale Electricity Market System requirements and inclusion of references to "Peak" in the related processes;
- inclusion of Peak Capacity Credits and Capacity Credit Allocation Submissions and clarification of how AEMO identifies Peak and Flexible Capacity Credit Allocations;
- updates to the approval and rejection equations; and
- updates regarding Capacity Credit Allocation Submissions withdrawal requirements and processes.
More details can be found in the WEM Procedure Change Report.
- WEM Procedure: Consumption Deviation Applications and Relevant Demand Excluded Days. The amendments remove Consumption Deviation Applications from Side Programmes and allow Side Programmes to submit requests to exclude a day that is non-representative of their usual operations from being Selected Days for Relevant Demand. More details can be found in the WEM Procedure Change Report.
- WEM Procedure: Dispatch of Demand Side Programmes. The amendments update the mechanism for AEMO to create a DSP Dispatch Merit Order and determine the inclusion of a DSP. The amendments also introduce the terms 'DSP Dispatch Merit Order' and 'Eligible Demand Side Programme' as defined terms for clarity. More details can be found in the WEM Procedure Change Report.
- WEM Procedure: WEM Submissions. The amendments clarify the process explanations and incorporate the Real-Time Market Submissions and Standing Real-Time Market Submissions procedures. More details can be found in the WEM Procedure Change Report.
The revised WEM Procedures have all commenced. Most commenced on 1 October 2026; however, WEM Procedure: Network Access Quantity Model commenced on 1 September 2026 and WEM Procedure: Rule Participant Registration Processes commenced on 7 September 2026.
Procedure Change Proposal: September 2026 – WEM Procedure: Commissioning Tests
AEMO released a WEM Procedure Change Proposal providing notice of proposed amendments to the Commissioning Tests procedure. The amendments seek to allow AEMO to obtain advice from the Network Operator (NO) in relation to a Commissioning Test Plan and clarify that AEMO must, in certain circumstances, consider previous reactive power studies conducted by the NO or request the NO to conduct the studies.
AEMO is accepting submissions on the Proposal by 5:00pm (AWST) on 28 October 2026 by submitting comments via email to WA.Marketdevelopment@aemo.com.au.
Authors: Dan Brown, Partner; Dale Gill, Partner; Kate Phillips, Partner; Aylin Cunsolo, Partner; Paul Newman, Consultant; Lauren Zambotti, Counsel; Isabelle Jardine, Graduate; Nikhil Kaniyur, Paralegal; Sow Nagendran, Paralegal; James Derrick, Paralegal
