The AEMC has today published an issues paper commencing consultation on advice that it has been asked to provide to the Standing Council on Energy and Resources (SCER) in relation to the resilience of the financial relationships and markets that underpin the operation of the National Electricity Market (NEM).
SCER requested that the AEMC, with input from market participants, provide advice on any risks to the efficient functioning of the NEM arising from financial interdependencies between market participants as a result of their exposure to a common spot price and their hedging arrangements. The AEMC will advise on:
- the nature of any risks to financial stability in the NEM arising from financial interdependencies between market participants;
- whether the existing mechanisms to mitigate these risks are adequate; and
- if necessary, options to strengthen those existing mechanisms and minimise the identified risks and their consequences.
The AEMC has commenced public consultation on the development of this advice with the publication of an issues paper and SCER’s request for advice.