Consultation starts on rule change request on declaration of lack of reserve (LOR) conditions

22 August 2017

The AEMC today published a consultation paper on a rule change request from AEMO to redefine the conditions when it can declare a lack of reserves (LOR) and signal to the market that electricity reserves are running low.

There are mechanisms in the national electricity rules which enable AEMO to take action if it believes there may be a shortfall in electricity supply. One of these mechanisms is a declaration of lack of reserve (LOR) conditions followed by a market notice, when AEMO invites generators to bid any spare supply into the market, to reduce the risk of load shedding.

The current definitions used for LOR declarations are based around the loss of the largest generator.  AEMO considers that these definitions are too narrow given the changing nature of the electricity system. The rule change proposes to change the definitions so the LOR system can be triggered by a wider range of risks than those presently allowed for.

In its request, AEMO notes it wants to have this rule in place this summer to enable the LOR framework to immediately benefit, should the rule be made as proposed. The Commission therefore proposes to treat this rule change as a priority, however we will apply the standard timeframes for consultation so industry and consumers have sufficient opportunity to provide input. This would enable a final determination by the end of this year.

Stakeholder submissions on the consultation paper are due by 19 September 2017.

This rule change request is being progressed separately but in parallel to the Reliability Frameworks Review, a holistic review of the market and regulatory frameworks that underpin reliability in the national electricity market. Aspects of the LOR framework that are outside of the scope of this rule change are being considered through the review.