Market Review: Open

Overview

The Reliability Panel invites interested stakeholders to a meeting to discuss its November 2017 draft report on the Review of the reliability standard and reliability settings.
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The Reliability Panel invites interested stakeholders to a meeting to discuss its November 2017 draft report on the Review of the reliability standard and reliability settings. The meeting will be held at the AEMC’s office in Sydney on Wednesday 7 March 2018.

The meeting will consider feedback from stakeholders on the Panel’s proposal to keep the market price cap and cumulative price threshold at their current levels. The Panel’s modelling of five minute settlement and the implications for the review’s final recommendations will also be presented at the meeting.

The Panel notes that issues relevant to the broader market and regulatory frameworks for reliability are outside the scope of this review and will not be covered at this meeting. These broader issues are being addressed through the Energy Security Board’s proposed national energy guarantee and the AEMC’s Reliability frameworks review.

Please register here by Friday 2 March 2018. For more information contact Jackie Biro by email at jackie.biro@aemc.gov.au or phone 02 8296 0606.

The final report will be published by 30 April 2018.

In accordance with National Electricity Rules, the Reliability Panel is required to review the reliability standard and settings every four years. On 21 November 2017 the Panel published a draft report to present, and seek stakeholder views on, the Panel’s draft findings and recommendations on the reliability standard and reliability settings to apply in the national electricity market (NEM) from 1 July 2020.

The Panel is carrying out the review in accordance with the requirements set out in the rules, its Terms of Reference, and the Review of reliability standard and settings guidelines, final guidelines, completed in 2016.

The Panel’s draft findings and recommendations with respect to the reliability standard and the reliability settings are as follows:

Component and purpose Current level (2017/18) Recommended level from 1 July 2020

Reliability standard

  • Expresses the level of reliability sought from the NEM’s generation and transmission inter-connector assets. 
A maximum expected unserved energy in a region of 0.002 per cent of the total energy demanded in that region for a given financial year. A maximum expected unserved energy in a region of 0.002 per cent of the total energy demanded in that region for a given financial year.

Market price cap

  • Limits market participants’ exposure to temporary high prices, being the maximum bid (and therefore settlement) price that can apply in the wholesale spot market. It should be set at a level such that prices over the long term incentivise enough new investment in generation so the reliability standard is expected to be met.
 $14,200/MWh  $14,200/MWh     ($2017)

Cumulative price threshold

  • Limits participants' financial exposure to prolonged high prices, by capping the total market price that can occur over seven consecutive days. It should be set at a level such that prices over the long term incentivise enough new investment in generation so the reliability standard is expected to be met.
$212,800 $212,800 ($2017)

Administered price cap

  • Limits participants' financial exposure to prolonged high prices, being the price ‘cap’ that applies when the cumulative price threshold is exceeded. 
$300/MWh $300/MWh

Market floor price

  • Prevents market instability, by imposing a negative limit on the total potential volatility of market prices in any half hour trading interval. 
-$1,000/MWh -$1,000/MWh

The reliability standard and settings focus on the future performance of the NEM. Their purpose is to:

  • Establish the level of reliability consumers can expect from key aspects of the physical system (generators and interconnectors), by setting the reliability standard.
  • Maintain the overall integrity of the market, by protecting market participants and consumers from excessively high prices.
  • Allow for sufficient investment to provide electricity to the agreed reliability standard.

AEMC Director, Christiaan Zuur (02) 8296 7841 or christiaan.zuur@aemc.gov.au

AEMC Senior Advisor, Jackie Biro (02) 8296 0606 or jackie.biro@aemc.gov.au

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