Reliability Panel publishes issues paper for 2018 review of reliability standard and settings

06 June 2017

The AEMC’s Reliability Panel today published an issues paper for the 2018 reliability standard and settings review that considers whether the reliability standard and settings will remain suitable for the market from July 2020.

Reliability of the power system is about having sufficient capacity to generate and transport electricity to meet consumer demand. Every four years, the Panel conducts a review into the reliability standard and settings – a set of parameters that bear on price, investment and ultimately reliability in the national electricity market.

The Panel is cognisant of the pace of change in the energy market. The issues paper sets out the emerging market trends and policy developments and how the Panel proposes to address them.

In particular, the Panel recognises that having the right standard and settings are essential to allow appropriate signals for investment, but these are not enough on their own. The Panel considers that market uncertainty, created by the absence of effective integration of emissions reduction and energy policy, among other things, is one factor impacting on investment in the market.

This uncertainty makes it difficult for business and consumers to invest – and undermines the reliability of power supply. A critical policy need is the effective integration of emissions reduction and energy policy.

The 2018 review will consider the standard and settings to apply from 1 July 2020, as required under the National Electricity Rules. The issues paper seeks stakeholder views to inform the Panel’s assessment. The paper also outlines any future market or policy conditions that the Panel considers are outside the scope of the review. 

Stakeholders are invited to provide input on the issues paper by 12 July 2017.

The Panel’s draft determination is due to be released in late 2017. The Panel is required to complete the review by 30 April 2018.

Media: Prudence Anderson, 0404 821 935 or (02) 8296 7817

Reliability Panel

The Reliability Panel's core functions relate to the safety, security and reliability of the national electricity system. The focus of the Panel's work is on determining standards and guidelines which are part of the framework for maintaining a secure and reliable power system. The Panel is chaired by AEMC Commissioner, Mr Neville Henderson. Its members are broadly representative of all stakeholders interested in the operation of the power system and the electricity market including consumer groups, generators, network service providers, retailers and the power system and market operator, AEMO.

Reliability standard

The reliability standard currently requires there be sufficient generation and transmission interconnection such that 99.998% of annual demand for electricity is expected to be supplied. It is not a regulatory or performance standard that is ‘enforced’ but rather it is a planning standard used to indicate to the market the required level of supply and demand on a regional basis.

The reliability standard is used by the Australian Energy Market Operator (AEMO) to guide its assessments of supply adequacy through its Projected Assessments of System Adequacy process. This involves collecting information and analysing if electricity supply can meet the standard in the short term (a one week outlook) and medium term (a two year outlook).

State and territory governments set the level of reliability that must be provided by transmission and distribution networks (‘poles and wires’).

Reliability settings

The reliability settings are the price mechanisms in the electricity wholesale market: the market price cap, the market floor price, the cumulative price threshold and the administered price cap.