Market Review: Completed

Overview

On 20 February 2014, the AEMC published its final report on its review of the Australian Energy Market Operator’s (AEMO) management of negative inter-regional settlements residues (IRSRs). The AEMC considered that current arrangements are broadly appropriate and proposed some minor changes.
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<p>
On 20 February 2014, the AEMC published its final report on its review of the Australian Energy Market Operator&rsquo;s (AEMO) management of negative inter-regional settlements residues (IRSRs). The AEMC considered that current arrangements are broadly appropriate and proposed some minor changes.</p>
<p>
The AEMC&rsquo;s final recommendations are that:</p>
<ul>
<li>
the current threshold of $100,000 for intervention should be retained as the evidence does not support increasing or decreasing it;</li>
<li>
there is benefit in AEMO investigating and consulting on alternatives to current arrangements with the aim of reducing the incidence of the repeated application and release of the clamp within a trading day;</li>
<li>
AEMO should communicate to stakeholders its basis for how increments are set when a clamp is applied or released;</li>
<li>
where possible, AEMO should publish its estimate of the negative IRSRs within a current trading interval in real-time; and</li>
<li>
AEMO&#39;s use of the metered interconnector flow from the beginning of the previous dispatch interval to estimate the most recent value of the negative IRSRs within a current trading interval is appropriate.</li>
</ul>
<p>
The AEMC has not proposed to change the National Electricity Rules.</p>
<p>
<strong>Background</strong></p>
<p>
Under clause 3.8.10(g) of the National Electricity Rules, the AEMC is required to review AEMO&rsquo;s management of negative IRSRs. This clause was introduced under the Arrangements for Managing Risks Associated with Transmission Network Congestion rule change request. This rule change request was based on a recommendation from the AEMC&rsquo;s Congestion Management Review, which was completed in 2008.</p>
<p>
The scope of the review covered the:</p>
<ul>
<li style="margin-left: 36pt;">
efficiency of AEMO&rsquo;s current policy and practice of managing negative IRSRs, including the &lsquo;clamping&rsquo; of negative IRSRs when their value reaches $100,000; and</li>
<li style="margin-left: 36pt;">
appropriateness of the $100,000 intervention threshold.</li>
</ul>
<p>
The AEMC has not reviewed negative IRSRs generally; rather, it specifically reviewed AEMO&rsquo;s management of negative IRSRs.</p>
<p>
On 18 April 2013, the AEMC published an issues paper on this review. The issues paper set out the context and key issues for the review and, based on a set of consultation questions, invited submissions from stakeholders. Submissions closed on 31 May 2013 and 9 submissions were received.</p>
<p>
On 24 October 2013, the AEMC published a draft report on this review. This report set out the AEMC&rsquo;s draft findings. Submissions were due on 6 December 2013 and 4 submissions were received.&nbsp;</p>

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