The Australian Energy Market Commission (AEMC) has acknowledged the need for a key reform in the 5-minute settlement rule, but in the same statement said it does not plan to implement the rule change for 3 years.

The ‘5-minute rule’ would help address price spikes and load shedding by changing market price periods. This would encourage investment in storage and peak-demand technologies.

“The AEMC has acknowledged that a 5-minute rule is the obvious way to go, but simultaneously postponed actually doing it for 3 years,” Executive Director of The Australia Institute, Ben Oquist said.

“The rule maker needs to explain why it is not capable of implementing this common sense rule change before next summer.

The AEMC’s Directions Paper, released last night, showed that the AEMC is opposed to five minute settlement markets but concedes that is losing the argument.

“It’s a strange situation when the AEMC tries to make the argument for doing nothing but raises a three year implementation timeframe.

The five minute rule is supported by both the Australian Energy Market Operator, which manages the physical grid and the trading markets and also by the Australian Energy Regulator, which has oversight of energy markets.

“The International Energy Agency has adopted a position in favour of faster markets and notes the global trend towards them, which leaves Australia using an outdated system.

“The preliminary report of the Finkel Review revealed that the Chief Scientist and his panel appreciate the benefits of faster and more efficient markets for energy conservation and emerging technologies like batteries.

“By refusing to reform the market, the AEMC is passing the buck to the States and the system operator, the Australian Energy Market Operator to deal with energy security threats,” said Mr Oquist.

The Australia Institute published an open letter to the Prime Minister, in the Australian Financial Review, calling for three market reforms, including the 5-minute rule, to address the ‘energy trilemma’: security, cost and emissions.

Prominent signatories of the open letter include: Former Liberal Party leader John Hewson; Chair, Embark Australia, Simon Holmes à Court; Director, Australian Centre for Advanced Photovoltaics, Professor Martin Green AS FRS FAA FTSE; Chairman, GreenSync, Neil Gibbs; General Manager of Keppel Prince, Steve Garner; former Industry Commissioner, Emeritus Professor Tor Hundloe AM; Emeritus Professor, Barbara Pocock.