Rule Change: Completed
On 10 September 2020, the AEMC published a final rule and determination to amend the National Electricity Rules (NER) to improve the efficiency and clarity of intervention mechanisms.
- removes the mandatory restrictions framework
- removes the obligation on AEMO to counteract during an intervention
- clarifies the basis for affected participant compensation cost recovery following activation of emergency reserves under the reliability and emergency reserve trader (RERT).
Rationale for final rule
The main reasons for each of the changes are as follows:
- Removal of the mandatory restrictions framework: Given the difficulty in accurately estimating demand reduction, the mandatory restrictions framework carries the risk of delivering unintended pricing outcomes and increased costs to consumers. Allowing the market to operate normally (by removing the framework) will deliver more efficient price outcomes for consumers.
- Removal of the obligation to counteract during an intervention: requiring AEMO to "manually" adjust dispatch targets in order to limit the number of affected participants and confine the impact of an intervention to a single region (as required by the counteractions obligation) can increase costs compared with the alternative of allowing the national electricity market dispatch engine (NEMDE) to optimise dispatch targets automatically and at least cost in the wake of an intervention event.
- Clarification of the basis for affected participant compensation cost recovery following activation of RERT: This change formalises the basis on which AEMO currently apportions and recovers affected participant compensation costs when the RERT is activated.
Rule change requests from AEMO
On 28 May 2020, the AEMC initiated three rule change requests related to intervention mechanisms within the National Electricity Rules (NER) through a consolidated and fast-tracked process.
The rule change requests action three of the AEMC’s recommendations in its Investigation into intervention mechanisms in the NEM final report.
The three rule change requests submitted by AEMO are:
• Recovering affected participant compensation for RERT activation, submitted on 19 September 2019.
• Removal of mandatory restrictions framework, submitted on 23 October 2019.
• Removal of obligation to counteract during intervention, submitted, on 28 November 2019.
Fast track process
On 28 May 2020, the AEMC initiated these three rule change requests related to intervention mechanisms within the National Electricity Rules (NER) through a consolidated and fast-tracked process.
The AEMC decided to consolidate these rule change requests as they seek to address related issues. Consolidation will allow these issues to be considered through a single rule change process.
The consolidated rules are being fast-tracked as stakeholder feedback on the issues was initially sought and received in 2019 as part of the AEMC’s Investigation into intervention mechanisms in the NEM. As such, the AEMC proceeded to publishing directly to a draft determination and draft rule.
A draft determination was published on 18 June 2020 and two stakeholder submissions were received in response.
Related rule changes
This rule is part of a package of seven rule changes being progressed by the Commission as part of its interventions work program. The other rule changes that comprise this work program are: