By Sarah Pick, Partner

What is the Rule Change?

On 22 May 2025, the Australian Energy Market Commission (AEMC) released its Final Rule Determination (Final Determination) and the National Electricity Amendment (Improving the NEM access standards – Package 1) Rule 2025 (Final Rule) (Rule Change).

The Rule Change is a result of the rule change request from the Australian Energy Market Operator (AEMO) on 4 April 2024 to improve the technical requirements for connection[1] to the National Electricity Market (NEM). The technical requirements for connections are set out in Chapter 5 of the National Electricity Rules (NER) and are known as ‘access standards’. The AEMC initiated the rule change request under the ‘fast track process’ and consequently did not issue a consultation paper and instead published a draft rule determination (Draft Determination) and draft rule (Draft Rule) on 5 December 2024.

The Final Determination provides that the AEMC made a more preferable Final Rule that largely maintains the Draft Rule but also makes several additional clarifications in response to the 23 submissions received in Draft Rule and Draft Determination.

The key change that the Final Rule implements is that the access standards set out in Chapter 5 of the NER will now be applied by plant type as opposed to being applied based on the registration category of the operator of the plant (which is the current approach). In order to facilitate these changes, a number of new definitions have been included in the NER.

The purpose of this article is to set out:

• the changes to the application of the 3 key technical schedules in Chapter 5 of the NER, Schedule 5.2, Schedule 5.3 and Schedule 5.3a; and
• how the transitional provisions in the Final Rule will impact current, proposed and future connection projects.

In addition to changing the application of the access standards, the Rule Change also makes several technical amendments to the access standards. This article does not discuss these changes.

The Rule Change will commence on 21 August 2025, so it’s important to start thinking about how it may impact current, future or proposed connections.

What are the changes to the application of Schedule 5.2?

Schedule 5.2’s current title is ‘Conditions for Connection of Generators and Integrated Resource Providers’ and it applies to registered Generators and registered Integrated Resource Providers.[2]

The new title for Schedule 5.2 will be ‘Technical connection requirements for generating systems, integrated resource systems and synchronous condensers’ and it will apply to Schedule 5.2 Participants in respect of schedule 5.2 plant.[3]

Schedule 5.2 plant[4]is:

1. a production unit which is either:
   • a generating system; or
   • an integrated resource system, but only to the extent of its production units and synchronous condensers (as applicable), and any auxiliary or reactive plant located on the Integrated Resource Provider’s side of the connection point and necessary for the integrated resource system to meet its performance standards; or
2. a synchronous condenser system which is a system comprising one or more synchronous condensers that are not part of a generating system or integrated resource system including auxiliary or reactive plant that is necessary for the system to meet its performance standards.

A person is a Schedule 5.2 Participant in respect of schedule 5.2 plant if that person is one of the following:[5]

1. a Connection Applicant or party to a connection agreement with a network service provider who is, or intends, to be, a Registered Participant for that schedule 5.2 plant;[6] or
2. a Connection Applicant or party to a connection agreement with the network service provider who has appointed, or intends to appoint, an intermediary for that schedule 5.2 plant;[7] or
3. a Connection Applicant or party to a connection agreement with the network service provider who:
   • has received, or intends to apply for, an exemption from registering as a Generator or Integrated Service Provider; [8] or
   • is entitled to an automatic exemption (but only to the extent that the network service provider considers the connection would otherwise adversely affect other Network Users);[9] or
4. a Connection Applicant or party to a connection agreement with the network service provider, for a synchronous condenser system:
   • with a combined nameplate rating of 5 MVA or more; [10] or
   • with a combined nameplate rating of less than MVA but only to the extent that the network service provider considers the connection would otherwise adversely affect other Network Users;[11] or
5. the network service provider whose network incorporates the schedule 5.2 plant, where the schedule 5.2 plant:
   • has a combined nameplate rating of 5 MW/MVA or more; and
   • will not be subject to a connection agreement with a third party for the operation of that plant [12]

Consequently, after the commencement of the Final Rule (subject to the transitional provisions), Schedule 5.2 will apply to Schedule 5.2 Participants in respect of schedule 5.2 plant.

What are the changes to the application of Schedule 5.3?

Schedule 5.3’s current title is ‘Conditions for Connection of Customers’ and it applies to Market Customers in respect of its market connection points, Non-Registered Customers in respect of its connection to a network and a Distribution Network Service Provider in respect of its distribution network.[13]

The new title for Schedule 5.3 will be ‘Technical connection requirements for loads’ and it will apply to Schedule 5.3 Participants in respect of schedule 5.3 plant.[14]

Schedule 5.3 plant[15]is plant that consumes electricity from a network:

1. including a distribution network or a source of load in an integrated resource system; but
2. excluding schedule 5.2 plant and schedule 5.3a plant.

A person is a Schedule 5.3 Participant[16] in respect of schedule 5.3 plant if that person is one of the following:[17]

1. a Connection Applicant or party to a connection agreement with a network service provider who is, or intends, to be, a Registered Participant for that schedule 5.3 plant;[18] or
2. a Connection Applicant or party to a connection agreement with the network service provider who has appointed, or intends to appoint, an intermediary for that schedule 5.3 plant;[19] or
3. a Connection Applicant or party to a connection agreement with the network service provider who has connected or intends to connect that schedule 5.3 plant to a transmission network;[20] or
4. a Connection Applicant or party to a connection agreement with the network service provider, for schedule 5.3 plant who is not a person described in paragraphs 1, 2 or 3 about but only to the extent that the network service provider considers the connection or operation of the schedule 5.3 plant would otherwise adversely affect the quality or security of the network service to other Network Users.[21]

Consequently, after the commencement of the Final Rule (subject to the transitional provisions), Schedule 5.3 will apply to Schedule 5.3 Participants in respect of schedule 5.3 plant.

What are the changes to the application of Schedule 5.3a?

Schedule 5.3a’s current title is ‘Conditions for Connection of Market Network Services’ and it applies to Market Network Service Providers who connect to either a transmission network or a distribution network.[22]

The new title for Schedule 5.3 will be ‘Technical connection requirements for high voltage direct current networks’ and it will apply to Schedule 5.3a Participants in respect of schedule 5.3a plant. [23]

Schedule 5.3a plant[24]is a system comprising high voltage direct current technology with a power transfer capability of 5MW or more, used to transfer electricity to, from or between one or more alternating current networks (or parts of any alternating current network) of a Network Service Provider).

A person is a Schedule 5.3a Participant[25] in respect of schedule 5.3a plant if that person is:[26]

1. the person who is, or intends, to be, registered a Market Network Service Provider in respect of that schedule 5.3a plant;[27] or
2. any other Network Service Provider in respect of a schedule 5.3a plant that is, or will be:
   • connected to the alternating current network of a registered Network Service Provider;[28] or
   • interfaced only with alternative current selections of the person’s own network;[29] or
3. a person exempted under clause 2.5.1(d) from the requirement to register as a Network Service Provider in respect of a schedule 5.3a plant that is, or will be:
   • connected to the alternating current network of a registered Network Service Provider;[30] or
   • interfaced only with alternative current selections of the person’s own network. [31]

Consequently, after the commencement of the Final Rule (subject to the transitional provisions), Schedule 5.3a will apply to Schedule 5.3a Participants in respect of schedule 5.3a plant.

What are the transitional arrangements?

The Final Rule sets out transitional provisions that set out whether a Connection Applicant will need to ensure its plant complies with the access standards under the Final Rule (New Access Standards) or the access standards currently set out in the Chapter 5 of the NER (Old Access Standards).

The below diagram sets out how to determine whether the New Access Standards or the Old Access Standards will apply to a new connection or a connection alteration.

As indicated in the above flow chart, there are some circumstances where a Connection Applicant may give the Network Service Provider notice that it wishes to apply some or all of the New Access Standards to the plant it is proposing to connect.

Where the Connection Applicant advises that it wishes to apply all of the New Access Standards to the plant it is proposing to connect:

1. the Network Service Provider must, within 30 days of the Connection Applicant’s notice provide written details of each technical requirement relevant to the proposed plant required under clause 5.3.3(b1); and
2. the New Access Standards will be applied for the purpose of determining a negotiated access standard for the plant under clause 5.3.4A.

Where the Connection Applicant advises that it wishes to apply some of the New Access Standards and some of the Old Access Standards (Mixed Access Standards), rule 11.186.4 of the Final Rule sets out the process that the Network Service Provider and AEMO will follow to determine whether the proposed Mixed Access Standards are accepted or rejected.

Preparing for the commencement of the Final Rule

For projects that have already commenced the connection process or are looking to commence the connection process prior to the commencement of the Final Rule, it is important that consideration is given to the impact that the Final Rule will have on the access standards for the project.

If you need further help considering the implications of the Final Rule and how it may impact a connection project, please reach out for assistance.

 

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[1] Unless the context otherwise requires words in italics have the meaning given to that term in the National Electricity Rules (version 227) or the Final Rule (as applicable).

[2] Schedule 5.2 of National Electricity Rules (version 227).

[3] Schedule 5.2 of Final Rule.

[4] Rule S5.2.1(a) of Final Rule.

[5] Table 3.1 on page 13 of Final Determination.

[6] Rule S5.2.1(b)(1)(i) of Final Rule.

[7] Rule S5.2.1(b)(1)(ii) of Final Rule.

[8] Rule S5.2.1(b)(2)(i) of Final Rule.

[9] Rule S5.2.1(b)(2)(ii) of Final Rule.

[10] Rule S5.2.1(b)(3)(i) of Final Rule.

[11] Rule S5.2.1(b)(3)(ii) of Final Rule.

[12] Rule S5.2.1(b)(4) of Final Rule.

[13] Schedule 5.3 of National Electricity Rules (version 227).

[14] Schedule 5.3 of Final Rule.

[15] Rule S5.3.1a(a) of Final Rule.

[16] Rule S5.3.1a(a1) of Final Rule.

[17] Table 3.1 on page 14 of Final Determination.

[18] Rule S5.3.1a(a1)(1)(i) of Final Rule.

[19] Rule S5.3.1a(a1)(1)(ii) of Final Rule.

[20]Rule S5.3.1a(a1)(1)(iii) of Final Rule.

[21] Rule S5.3.1a(a1)(2) of Final Rule.

[22] Schedule 5.3a of Final Rule.

[23] Schedule 5.3a of National Electricity Rules (version 227).

[24] Chapter 10 of Final Rule.

[25] Rule S5.3a.1a(b) of Final Rule.

[26] Table 3.1 on page 14 of Final Determination.

[27] Rule S5.3a.1a(b)(1) of Final Rule.

[28] Rule S5.3a.1a(b)(2)(i) of Final Rule.

[29] Rule S5.3a.1a(b)(2)(ii) of Final Rule.

[30] Rule S5.3a.1a(b)(2)(i) of Final Rule.

[31] Rule S5.3a.1a(b)(2)(ii) of Final Rule.