Today, the AEMC has made a draft rule to streamline the process to determine compensation for generators and loads which are directed to provide certain services that support maintaining the secure operation of the power system. These “non-market services” may include, for example, a direction for a battery to maintain a specific state of charge.

The draft rule reduces administrative burden on the Australian Energy Market Operator (AEMO) and registered participants in the national electricity market (NEM) by amending the compensation framework for non-market services from two-steps to one-step, and makes other amendments that improve transparency, predictability, consistency and the allocation of risk.

Currently, when a participant is directed to provide non-market services (something which has occurred infrequently until recently), they may be compensated under the “fair payment price” framework. Following this initial compensation process, if a directed participant is still out of pocket, it may lodge a claim for additional compensation through a separate second process.

AEMO considered that the current two-step process to determine compensation for participants directed to provide non-market services is an unnecessary delay in finalising compensation. To improve administrative efficiency, AEMO proposed a one-step process.

In addition to moving from a two-step to a one-step process, the draft rule makes related changes, including to:

  • clarify the test for how AEMO classifies a direction, which determines the relevant compensation framework
  • simplify the factors that need to be taken into account in determining fair payment compensation.

The consideration of this rule change request is part of a wider Commission work program updating the framework for interventions in the NEM.

Submissions from stakeholders are requested by 5 November 2020.

Media: Kellie Bisset, Communication Director, (02) 8296 7800