Generators to provide three years’ notice of closure

The AEMC is seeking submissions on a draft rule that would require large electricity generators to provide at least three years’ notice before closing.

The new rule would make generators with scheduled or semi-scheduled generating units give the Australian Energy Market Operator (AEMO) at least three years’ notice of an intention to close, and regular updates about any changes.

“The closure of Hazelwood with just six months’ notice drove up wholesale prices and threatened the reliability of our energy system,” Federal Energy Minister Josh Frydenberg said.

Notice of closure will give the market time to invest in new dispatchable capacity before a generator closes down, stopping the price spikes and reliability pressures caused by the unexpected exit of large generators.”

A three-year notice rule was a key recommendation of the Finkel Review, with the chair of the Energy Security Board (ESB) Dr Kerry Schott proposing a rule change to impose the obligation on generators.

The AEMC also recommended new civil penalties, enforced by the Australian Energy Regulator, if generators fail to comply with the new obligations.

“The Federal Government’s priority is that we have sufficient continuous dispatchable power available to keep the lights on and bring prices down,” Mr Frydenberg said.

The rule change request is being progressed as part of the Commission’s broader system security and reliability work program.

Submissions on the draft determination and draft rule close September 27.