Rule Change: Open

Overview

The AEMC has published a directions paper for this rule change request. Submissions are due on 26 August 2021.
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The AEMC has published a directions paper for this rule change request. Submissions are due on 26 August 2021.

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.

On 24 September 2020, the Commission published a draft rule concerning the second kind of compensation – referred to in broad terms as “affected participant compensation”. It followed two rule change requests submitted by AEMO.

In lieu of publishing the final determination, a directions paper was published on 15 July 2021. This paper outlines refinements to the draft rule’s approach to calculating compensation, in response to practical complexities raised by AEMO in its submission to the draft rule. 

As these complexities related to batteries in their capacity as scheduled loads, the directions paper has been released alongside the draft rule for the Integrating energy storage systems into the NEM (Integrating storage) rule change , and addresses the interlinkages between the rule changes.

The Commission invites written submissions to the directions paper by 26 August 2021. These will inform the final determination and final rule, which is scheduled to be published alongside the final rule for the Integrating storage rule change by November 2021. 

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. 

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 proposed to incorporate FCAS into the automatic process of calculating compensation.

The draft rule also proposed to modify 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 large scale batteries. 

In response to the draft rule, AEMO’s submission raised practical complexities, primarily relating to batteries in their capacity as scheduled loads. Therefore, the Commission extended the time for making a final determination to 5 August 2021 to allow for further consideration of these complex matters. As AEMO’s concerns related to batteries specifically, the timeframe was also intended to align with the Integrating energy storage systems into the NEM rule change process. For this reason, the Commission further extended the time for making a final determination to 4 November 2021, to reflect an extension to the Integrating energy storage systems into the NEM rule change.

A directions paper was published on 15 July 2021, outlining the proposed approach to the final rule and allowing for additional consultation. This was alongside the draft rule for the Integrating storage rule change.
 

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Documentation