Market Review: Completed

Overview

On 21 December 2009, the Reliability Panel (Panel) published its Final Report on the Review of the Operational Arrangements for the Reliability Standards (the Review).
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<p>
On&nbsp;21 December 2009, the Reliability Panel (Panel) published its Final Report on the Review of the Operational Arrangements for the Reliability Standards (the Review). In the Final Report the Panel has:</p>
<ul>
<li>
made recommendations on the methodology used by AEMO to calculate MRLs:</li>
<li>
made changes to the Guidelines for the Management of Electricity Supply Shortfall events; and</li>
<li>
made changes to clarify the reliability standard.</li>
</ul>
<p>
These changes take effect immediately.</p>
<h2>
Background of review</h2>
<p>
On 3 March 2009 the AEMC approved terms of reference (ToR) requesting the Panel to undertake in accordance with section 38 of the National Electricity Law and clause 8.8.3 of the National Electricity Rules a review relating to Operationalisation of the Reliability Standards.&nbsp;Specifically the ToR requests that the Panel conduct reviews into the following aspects of operationalisation of the reliability standards:</p>
<ul>
<li>
the methodology and process used by NEMMCO for calculating the minimum reserve levels (MRLs), especially where the MRLs apply across more than one jurisdiction;</li>
<li>
the MRLs and associated arrangements and standards to be used in the short-term reserve assessment of reliability;</li>
<li>
the current &quot;Guidelines for management of electricity supply shortfall events&quot; (sometimes referred to as &lsquo;share the pain&#39; guidelines) that were issued by the Panel in September 1998;</li>
<li>
the need and possible design of a short-term version of the RERT that could be used in a critical emergency;</li>
<li>
whether the wording of the standard as published by the Panel in the CRR could be clarified to give better guidance to NEMMCO as to how to operationalise the standard; and</li>
<li>
whether the Rules should be amended to clarify the requirement for market participants to inform NEMMCO, via dispatch bids or offers, of their actual capability under the prevailing or forecast temperature conditions.</li>
</ul>
<p>
Furthermore, the Panel has been requested to commence a separate, but interrelated review on the &lsquo;Reliability Standard and settings&#39; under clause 3.9.3A(a) of the Rules. This review must be completed by the Panel in accordance with the Rules consultation procedures. Further information on this review may be found under REL0034, Review of the Reliability Standard and Settings.</p>
<p>
On 26 June 2009, the Panel published an Issues Paper on the Review. To highlight the interaction between the Review and the Panel&#39;s interrelated <a href="~/Markets-Reviews-Advice/Review-of-the-Reliability-Standard-and-Settings">Review of the Reliability Standard and Settings</a>, an explanatory note was also published. The Review will address a number of issues that are expected to be finalised ahead of the 2009/2010 summer peak demand, including:</p>
<ul type="disc">
<li>
the need for and possible design of a short-notice version of the reliability and emergency reserve trader (RERT) - previously consulted on;</li>
<li>
potential amendment of the current &quot;Guidelines for management of electricity supply shortfall events&quot; (sometimes referred to as the &lsquo;share the pain&#39; guidelines); and</li>
<li>
potential clarification of the current wording of the Reliability Standard.</li>
</ul>
<p>
In addition, the Review also intends to address:</p>
<ul type="disc">
<li>
the methodology and process used by NEMMCO/AEMO for calculating minimum reserve levels (MRLs), which will be applied when NEMMCO/AEMO recalculates the MRLs; and</li>
<li>
the MRLs and associated arrangements and standards to be used in the short-term reserve assessment of reliability, which will be implemented following this review.</li>
</ul>
<p>
Submissions on the Issues Paper closed on Friday, 31&nbsp;July 2009.</p>
<p>
The Panel held a combined public forum for the Review and the review of the Reliability Standard and settings on Monday, 13 July 2009 in Sydney. At the forum, presentations were given by the Panel and AEMO.</p>
<p>
On 30 October 2009, the Reliability Panel (Panel) published its Draft Report on the Review of the Operational Arrangements for the Reliability Standards (the Review).</p>
<p>
Submissions on the Draft Report were due on Friday, 27 November 2009. No submissions were received.</p>
<p>
The Panel submitted its interim amendments to the RERT Guidelines to the AEMC for publication on 29 October 2009&nbsp;in accordance with <a href="~/Rule-Changes/Improved-RERT-Flexibility-and-Short-notice-Reserve">National Electricity Amendment (Improved RERT Flexibility and Short-notice Reserve Contracts) Rule No.19 2009</a>. These interim amendments to the RERT guidelines replace those developed and published by the Panel on 24&nbsp;November 2008 under the project entitled <a href="~/Markets-Reviews-Advice/Reliability-and-Emergency-Reserve-Trader-(RERT)-Gu">Reliability and Emergency Reserve Trader (RERT) Guidelines</a>.</p>
<h2>
Consultation on short notice version of the RERT</h2>
<p>
One item included in the ToR was for the Panel to review &quot;the need and possible design of a short-notice version of the RERT that could be used in a critical emergency&quot;, where the RERT is the Reliability and Emergency Reserve Trader and defined in rule 3.20.<br />
To this end, the Panel investigated the operation of the current RERT with the objective of developing improvements that could be implemented for the summer of 2009/10.<br />
<br />
On 1 May 2009 the Panel published an exposure draft package of changes to the RERT that would allow it to operate at short notice. The package includes:</p>
<ul type="disc">
<li>
an exposure draft Rule change proposal</li>
<li>
an exposure draft Rule (Appendix A)</li>
<li>
an exposure draft of interim amendments to the RERT Guidelines (Appendix B)</li>
<li>
The Panel sought stakeholder views on the package of documents and submissions closed on Friday 29 May 2009.</li>
</ul>
<p>
The Panel amended its package to address issues raised in submissions. The Panel subsequently submitted its Rule change proposal and proposed Rule to the AEMC for assessment as an urgent Rule under section 96 of the National Electricity Law, to allow the package to be implemented by the summer of 2009/10.</p>

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