AGL's Submission to the Firm Energy Reliability Mechanism (FERM) – Market Liquidity Obligation Consultation

AGL appreciates the opportunity to provide feedback on the South Australian Market Liquidity Obligation (SA MLO) consultation and thank the Department for its engagement with industry throughout the process.

While AGL does not consider market-making obligations to be the appropriate mechanism to address liquidity concerns, we recognise that having differing market-making conditions and obligations across NEM jurisdictions would be onerous, inefficient, and counterproductive. In this context, if an SA-specific MLO is to be introduced, alignment with the framework recommended by the Nelson Review represents the most feasible alternative in the circumstances, providing a degree of consistency and avoiding the operational complexity that would arise from divergent regional requirements.

In considering the application of this framework in the South Australian context, it is important to recognise the structural characteristics of the region’s electricity market. South Australia’s comparatively small market size, combined with its high penetration of renewable generation, naturally results in lower contract market liquidity than larger NEM regions. Any final SA MLO design should be calibrated with these foundational realities firmly in mind to avoid imposing obligations that unintentionally concentrate risk, restrict participant flexibility, or fail to produce meaningful improvements in liquidity.

• Read the full submission (PDF).
• Read the responses to consultation questions (PDF)