Today, the AEMC initiated an AEMO rule change request and commenced consultation. The request is from the market operator, AEMO, and seeks to change the payment arrangements for when Transmission Network Service Providers owe AEMO one type of settlements residue payment. The AEMC is asking stakeholders whether they object to the AEMC assessing the rule change under its expedited process.
Under certain market conditions, AEMO receives payments from Transmission Network Service Providers (TNSPs) as part of the spot market settlements process. AEMO proposes to alter the timing of one of these payment types - the payment of negative intra-regional settlements residue.
A settlements residue occurs due to the method used in the national electricity market to account for the energy losses when electricity is transferred from generators to customers. There are two types of settlements residues that occur in the NEM - intra-regional and inter-regional. These can be either positive or negative. This rule change request deals solely with the payment of residues that are negative and intra-regional.
When this type of residue occurs, TNSPs are required to pay AEMO in order for AEMO to pay the market the full amount owing for a billing period. If TNSPs do not pay the correct amount on time, AEMO must make short payments to the market for that period.
This rule change relates to the timing of these payments by TNSPs, but not to the payment amount. AEMO has identified a risk associated with the payment timing. It believes that alternative payment arrangements are required to reduce the risk of AEMO not receiving the right payment amount on time and, hence, reducing the risk of short payments to the market. It is also seeking to align these payments with other similar payment procedures.
A copy of the rule change request is available on the AEMC website, along with an information note and a paper prepared by staff of the AEMC to guide consultation.