Rule Change: Open

Overview

On 24 September 2020, the AEMC made a draft rule to change compensation arrangements for market participants affected when the Australian Energy Market Operator (AEMO) intervenes in the market. 
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On 24 September 2020, the AEMC made a draft rule to change compensation arrangements for market participants affected when the Australian Energy Market Operator (AEMO) intervenes in the market. 

Submissions from stakeholders are requested by 5 November 2020.

When AEMO intervenes in the market by activating the Reliability and Emergency Reserve Trader (RERT) or issuing a direction, two kinds of compensation may be payable: one is directed participant compensation (only relevant to directions) and one is compensation for participants affected by (or dispatched differently as a result of) the RERT or a direction. 

The Commission’s draft rule relates to the second kind of compensation – referred to in broad terms as “affected participant compensation”. It follows from two rule change requests submitted by AEMO. 

Draft determination and draft rule 

The draft rule concerns the compensation payable to scheduled generators and scheduled loads if they are dispatched differently due to an intervention event which triggers intervention pricing. 

Currently, these participants are eligible for compensation in relation to energy but not frequency control ancillary services (FCAS). The Commission’s draft rule incorporates FCAS into the automatic process of calculating compensation.

The draft rule also modifies the way that compensation is calculated for scheduled loads when an intervention impacts how much they pay for energy. The revised framework  addresses the current potential for scheduled loads to be under or over-compensated. Scheduled loads in the NEM include pumped hydro and large scale batteries. 

The draft rule helps support a reliable and secure electricity system through the ongoing viability of participants providing frequency services to the market, which are increasingly important as the generation fleet transitions. The draft rule also improves the consistency, transparency and predictability of compensation processes.

Rule change request from AEMO 

On 19 September 2019, AEMO lodged two rule change requests relating to the framework for compensating participants affected by intervention events (set out in clause 3.12.2 of the national electricity rules – NER).

The first of the AEMO rule change requests concerned the compensation payable to scheduled generators if they are dispatched differently due to an intervention event. The AEMO rule change request sought to allow participants to be compensated if they incur losses related to FCAS.

The second rule change request related to scheduled loads which are dispatched differently as a result of an intervention event. Compensation for scheduled loads is calculated in accordance with a formula which includes as an input the price of the highest priced band specified in a dispatch bid – known as “BidP”. AEMO’s rule change request sought to change the definition of BidP as the current definition could result in participants being under-compensated where they are dispatched differently due to an intervention event.

The Commission determined that these two rule change requests should be consolidated since they relate to the same clause in the NER. 

On 11 June 2020, the AEMC initiated the two rule change requests from AEMO and published a consultation paper. 

Links to other current intervention rule change processes

The consideration of this rule change request is part of a wider Commission work program updating frameworks for interventions in the national electricity market (NEM).

The AEMC has also published a draft rule and draft determination in relation to compensation following directions for services other than energy and market ancillary services:

Compensation following directions for services other than energy and market ancillary services

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