Victoria steps outside NEM rules

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Legislation in Victoria has passed overnight allowing the state to override the rules of the National Electricity Market (NEM) to fast-track priority projects.

In February it was announced the state would move to override what it considered to be “complex and out-dated national regulatory regime” in order to fast-track projects like grid-scale batteries, transmission upgrades and renewable projects that will deliver benefits to consumers.

“The vulnerability of the national energy network has been highlighted in recent months, with each of Victoria, New South Wales, and South Australia narrowly avoiding load-shedding in late January,” the Victorian Government said in a statement.

“Extreme heat has created unprecedented demand for electricity while ageing, coal-fired generators repeatedly let Victoria down. The transmission system is also vulnerable to bushfires and severe weather events, like the mini-tornado that brought down the Heywood interconnector this summer.”

Related article: Victoria moves to exit the NEM

The proposal received backlash from the Energy Users’ Association of Australia and Australian Energy Council, who say change could mean higher costs for consumers.

“Victoria’s decision to step outside the National Electricity Market rules and go-it-alone on transmission developments is a retrograde step, the costs of which will be borne by the State’s energy users,” the Australian Energy Council says.

“The National Electricity Rules currently require a robust assessment of potential investments in new transmission infrastructure. This assessment is run independently and at arms length from political considerations. Its focus is on the best interests of customers, who ultimately pick up the tab for grid investments.

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“Investments in Victoria will no longer be subject to that test, which means customers may pay more. This is because every transmission and network investment will unavoidably affect market investments, so careful and individual assessments carried out at arms length from politics are critical.

“The Act has been rushed through the Victorian Parliament with no consultation and minimal scrutiny. It makes no effort to replace the regulator’s rigorous investment test with a Victorian equivalent. This can only be a bad outcome for Victorian households and businesses who may be locked into paying for multi-billion dollar investments with no confidence that it is the right call.”

Victorian Energy Minister Lily D’Ambrosio said on Twitter she is very pleased the bill passed the Parliament last night.