Rule Change: Open

Overview

On 4 April 2019, the AEMC initiated the rule making process for the rule change request submitted by AEMO on the Application of the regional reference node test to the Reliability and Emergency Reserve Trader (RERT).
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On 4 April 2019, the AEMC initiated the rule making process for the rule change request submitted by AEMO on the Application of the regional reference node test to the Reliability and Emergency Reserve Trader (RERT).

The regional reference node test (RRN test) is used by AEMO to determine whether to apply “intervention pricing” when it issues a direction (a form of market intervention).  Intervention pricing is used to minimise market distortion arising from intervention events. It does this by preserving the price signals that would have been seen by the market but for the intervention.

At present, the RRN test only applies to directions. If a direction relates only to a localised issue that would have no impact on the regional reference price, then the RRN test is not met and intervention pricing does not apply. 

Currently, intervention pricing is implemented every time the RERT is activated. However, AEMO’s rule change request proposes that the RRN test also apply to the RERT. This would require AEMO, when activating the RERT, to apply the test in order to decide whether to implement intervention pricing. For example, if the RERT were activated in order to address a localised rather than a region-wide issue, intervention pricing may not apply.

AEMO’s rule change request also proposes to amend the wording of the RRN test to improve clarity.

This rule change request is being progressed as part of the AEMC’s investigation into intervention mechanisms and system strength in the NEM. Further information on this can be found here
 

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