The AEMC has released proposals to open up the wholesale electricity market so large consumers can be more easily paid for reducing their demand on the power system. The wholesale demand response mechanism draft rule is in response to requests received from the Total Environment Centre, The Australia Institute and the Public Interest Advocacy Centre; the Australian Energy Council and the South Australian Government. 

The AEMC has published discussion notes from a workshop held on 16 August 2019 in Sydney on the proposed wholesale demand response mechanism. The workshop provided an opportunity for stakeholders to discuss the draft determination with AEMC Commissioner Michelle Shepherd and staff. These discussion notes are being made available to help support wide public debate.

The workshop focused on matters that arise specifically for retailers under the draft rule. Topics discussed included:

  • how the proposed settlement process under the draft rule would impact on retailers, including alternative approaches to determining the reimbursement rate
  • the arrangements relating to baselines under the draft rule
  • what information retailers should be provided in relation to their customers’ participation in the wholesale demand response mechanism
  • the proposed implementation timeframes for the draft rule
  • practical considerations associated with extending participation in the mechanism to small consumers.

This was the first of two workshops the AEMC is holding to discuss the draft determination. The second workshop is being held today and will cover a broader range of issues. Discussion notes from today’s workshop will be published shortly.

Submissions on the draft determination are due 12 September 2019. A final determination is due to be published in November 2019.

These rule change requests are being progressed as part of the Commission’s broader system security and reliability action plan

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

Draft determination

On 18 July 2019 the AEMC released a draft determination to implement a wholesale demand response mechanism.

Under the draft rule, a new category of registered participant, a demand response service provider (DRSP), would be able to bid demand response directly into the wholesale market as a substitute for generation. A DRSP could also engage directly with a customer without the involvement of that customer’s retailer.

The mechanism introduced under the draft rule is designed to provide greater opportunities for consumers to participate in the wholesale market by bidding in demand reductions as a substitute for generation, thereby unlocking under-utilised demand response in the national electricity market. The Commission considers that the mechanism will promote greater demand side transparency, as well as price and reliability-related benefits.

The Commission considers it important to provide opportunities to all consumers to participate in wholesale demand response. However, it is also important to make sure that appropriate energy-specific consumer protections are provided to consumers participating in the mechanism. As a result, the draft rule does not provide for small consumers to participate in the mechanism.

The substantive parts of the rule implementing the wholesale demand response mechanism are proposed to commence on 1 July 2022. The Commission has also made a series of complementary changes and recommendations relating to increasing transparency of wholesale demand response in the wholesale market.