The Australian Energy Market Commission (AEMC) has initiated consultation on a potential extension to the duration of the Declared Wholesale Gas Market (DWGM) interim Dandenong LNG storage measures.
Lily D’Ambrosio, Victorian Minister for Energy and Resources, submitted the request on 3 April 2025, calling for AEMC to amend the National Gas Rules to grant the extension, as well as implement a range of measures to improve transparency and oversight of the Dandenong liquefaction facility.
The AEMC published a consultation paper on 1 May 2025, calling for stakeholders to share their views on the issues raised in the rule change request and the proposed solution.
The current interim measures were enshrined in December 2022, when the AEMC made a final rule to enable the Victorian gas market operator to better manage the risk of curtailment for gas users during the tight demand-supply conditions expected from 2023 to 2025.
The Commission’s 2022 final rule:
- Empowered the Australian Energy Market Operator (AEMO) to act as buyer and supplier of last resort in relation to the Dandenong LNG storage facility for an interim period commencing on 1 January 2023 and ending on 31 December 2025
- Set out how AEMO is to perform both the buyer and supplier of last resort functions
- set out the supporting arrangements, including the contractual, cost recovery and proceeds distribution, and accountability and transparency arrangements that apply to these functions.
The interim arrangements expire at the end of 2025.
The AEMC said when it made its final rule, it was anticipated that by 2025 more permanent and fit-for-purpose measures to improve the reliability and supply adequacy (RSA) in the ECGS (East Coast Gas System) (the Stage 2 RSA reforms) would be implemented. The ECGS Supplier of Last Resort (SoLR) Mechanism proposed by Energy Senior Officials and the Victorian Minister could provide this permanent solution.
The AEMC intends to complete its consideration of the Stage 2 rule change requests by June 2026, followed by an implementation period to enable AEMO and other parties sufficient time to put in place the required arrangements (if a rule in relation to the Stage 2 rule change requests is made). Therefore, it is possible that if the AEMC decides to make these rules they would not be operational until 2027.
The AEMC said this timing will potentially leave a one to two year ‘gap’ between the expiry of the interim Dandenong LNG arrangements and other more permanent arrangements (if implemented). At the same time, the DWGM is expected to continue to face peak day reliability and supply adequacy threats.
It is against this backdrop that D’Ambrosio is seeking a three year extension of the interim Dandenong LNG arrangements.
Consultation is open until 29 May 2025.
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