Rule Change: Completed

Overview

On 11 March 2010 the AEMC gave notice under sections 102 and 103 of the NEL of the making of the final Rule determination and final Rule for the Early Implementation of Market Impact Parameters Rule change request. The Rule as made provides a process for transmission network service providers to apply to the AER to seek earlier implementation of the market impact component of the service target performance incentive scheme than currently permitted under clause 6A.7.4 of the Rules.
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<p>
<span style="font-family: Arial; font-size: 10pt; mso-fareast-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN-AU; mso-fareast-language: EN-AU; mso-bidi-language: AR-SA;">On 11 March 2010 the Australian Energy Market Commission (AEMC) gave notice under sections 102 and 103 of the National Electricity Law (NEL) of the making of the final Rule determination and final Rule for the Early Implementation of Market Impact Parameters Rule change request.&nbsp;Under sections 103 and 91A of the NEL, the AEMC has made a more preferable Rule.</span></p>
<p>
<span style="font-family: Arial; font-size: 10pt; mso-fareast-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN-AU; mso-fareast-language: EN-AU; mso-bidi-language: AR-SA;">The Rule as made provides a process for transmission network service providers (TNSPs) to apply to the Australian Energy Regulator (AER) to seek earlier implementation of the market impact component of the service target performance incentive scheme than currently permitted under clause 6A.7.4 of the National Electricity Rules (Rules).&nbsp; The final Rule determination and Rule as made are largely reflective of, and consistent with, the draft Rule determination and draft Rule. One change from the draft Rule is a requirement in the Rule as made for the AER to determine the start date for the early implementation of the market impact component for each application.</span></p>
<h2>
<span style="font-family: Arial; font-size: 10pt; mso-fareast-font-family: &quot;Times New Roman&quot;; mso-ansi-language: EN-AU; mso-fareast-language: EN-AU; mso-bidi-language: AR-SA;"><strong>Background</strong></span></h2>
<p>
On 30 April 2009 Grid Australia submitted a Rule change request relating to the implementation of the service target performance incentive scheme under clause 6A.7.4 of the Rules.</p>
<p>
Clause 6A.7.4 of the Rules requires the AER to publish the service target performance incentive scheme (the incentive scheme) that applies to TNSPs.&nbsp;The clause was introduced in 2006 as a part of the amendments to the Rules following the Review of Electricity Transmission Revenue and Pricing Rules by the AEMC.</p>
<p>
Clause 6A.7.4(f) provides that any amendment or replacement of the incentive scheme will not apply to a TNSP in respect of a regulatory control period that has commenced before, or that will commence within 15 months of, the incentive scheme coming into operation. The AER published an amendment to the incentive scheme in March 2008 which means, in effect, that this version of the incentive scheme will not be introduced for most TNSPs until 2012 onwards.</p>
<p>
The Rule change proposal from Grid Australia proposed to insert new provisions in Chapter 11 of the Rules to allow one component of the incentive scheme, the market impact component introduced in the incentive scheme published in March 2008, to be implemented earlier than permitted under clause 6A.7.4(f).&nbsp;</p>
<p>
On 6 August 2009, the AEMC published a notice under section 95 of the NEL commencing the first round of consultation on this Rule change request.&nbsp; A Consultation Paper prepared by the staff of the AEMC was also published to provide guidance to stakeholders wishing to make submissions.&nbsp; Submissions to this first round of consultation closed on 2 October 2009 and four submissions were received.</p>
<p>
On 10 December 2009 the AEMC gave notice under section 99 of the NEL of the making of the draft Rule determination and the draft Rule for the Early Implementation of Market Impact Parameters Rule change request.&nbsp; Submissions to the second round of consultation closed on 29 January 2010 and two submissions were received.</p>

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