Credit Limit Procedures - SSC and related changes

Timeline

Key contact

Email: NEMReform@aemo.com.au

Matters under consultation

AEMO is implementing the Shortening the Settlement Cycle (SSC) reform following the Australian Energy Market Commission’s final determination, made on 12 December 2024. The change was made in response to GloBird Energy’s rule change request to shorten the settlement cycle.

The changes reduce the amount of prudential collateral held by AEMO to cover accrued liabilities (typically of retailers) in the NEM, i.e. unpaid settlement amounts. Lowering working capital requirements for small retailers in particular, would lower barriers to market entry and support increased investment in service innovation and more competition. This should benefit consumers through access to more choice and better service offerings.

The final rule shortens the National Electricity Market (NEM) settlement cycle to nine business days following the end of a billing period and introduces a new revision 20 business days following the end of the billing period.

The final rule will commence at the start of billing week 33 on 9 August 2026.

The Credit Limit Procedures establish the methodology by which AEMO determines the prudential settings for each market participant so that the prudential standard is met for the NEM.

AEMO is now consulting on updates to the Credit Limit Procedures in accordance with NER 3.3.8 and the standard rules consultation procedure in clause 8.9.2 of the National Electricity Rules (NER).

Submissions are now due to NEMReform@aemo.com.au by 5pm AEST on Monday 21 July 2025. Please note that submissions will be published, other than confidential material, as per AEMO’s Consultation submission guidelines.                                                                       

This is a Standard consultation for the National Electricity Market.

Scope

The focus of this consultation is proposed amendments to the Credit Limit Procedures to:

• Reflect changes to be made with effect from 9 August 2026 by the National Electricity Amendment (Shortening the settlement cycle) Rule 2024, such as:
  • Updating the Outstandings limit (OSL) time period (TOSL)
  • Updates to managing extreme market conditions under SSC
  • Updates to MCL for new entrants, MNSPs and DRSPs

• Propose changes that address gaps in the Procedures in order to better align market participant credit support requirements with prudential risks, such as:
  • Improving Regional Model calibration and meeting the prudential standard.
  • Accounting for negative prices in the Regional Model.
  • Correcting TAS region data.
  • Reflecting market participant risk profile in MCL calculations.
  • Using credit and debit energy and absolute value of price concepts when calculating Maximum Credit Limit (MCL).