Rule Change: Open

Overview

This rule change request from AEMO seeks broad changes to the Reliability and Emergency Reserve Trader (RERT). The RERT is a type of strategic reserve that allows AEMO to pay a premium for additional capacity to be on stand-by in case of emergencies when the demand and supply balance is tight.
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This rule change request from AEMO seeks broad changes to the Reliability and Emergency Reserve Trader (RERT). The RERT is a type of strategic reserve that allows AEMO to pay a premium for additional capacity to be on stand-by in case of emergencies when the demand and supply balance is tight. 

On 7 February 2019 the Commission published a draft determination for this rule change request. The draft determination sets out a series of changes that will provide AEMO with the flexibility it needs to use the RERT to manage the transition in the power system, while doing so at least cost to consumers. 

The draft rule enhances the RERT framework, by embedding it clearly within the reliability framework, providing AEMO with flexibility about how and when to purchase standby electricity supplies for events like extreme heatwaves, while keeping costs to consumers as low as possible.

Draft determination

The Commission has made a draft rule that is a more preferable rule. The draft rule will allow AEMO to procure reserves for the 2019-20 summer through the new framework.

Some key features of the draft rule include:

  • Clarifying that the trigger for procuring RERT is a breach of the reliability standard
  • Increasing the time for AEMO to procure reserves from nine months to 12 months ahead of when it considers reserves will be needed
  • Introducing a price guide on the RERT so that the price paid for RERT is less than the cost of involuntary load shedding
  • Encouraging the market to be the primary means by which reliability is delivered by strengthening the provisions that govern that the RERT only includes out-of-market reserves
  • Improving transparency of how the RERT works and how much it costs.

Stakeholder submissions on the draft determination were due by 21 March 2019, and can be found below.

Technical working group

A technical working group is helping to inform the AEMC’s assessment of this rule change request. The group comprises experts from generators, network businesses, retailers, consumer groups and AEMO. 

Meetings have been held on 4 September 2018, 20 November 2018 and 14 December 2018 and 5 April 2019. Minutes of these meetings can be found below. 

Next steps

The final determination for this rule change is scheduled for publication by 2 May 2019.

Background 

Consultation paper
On 21 June 2018 the Commission initiated its assessment of the proposed rule with the publication of a consultation paper for stakeholder comment.  Twenty-five submissions were received. All public submissions can be found below.

Extension
On 4 October 2018 the Commission extended the period of time to make the draft determination to 31 January 2019. The Commission considered that this extension was necessary due to the complexity and cost implications of the issues considered, and to allow time for other key inputs to the request to be received.

On 31 January 2019 the Commission further extended the period of time to make the draft determination to 7 February 2019, under section 107 of the National Electricity Law. The Commission considers that this extension is necessary due to complexity of drafting associated with rules implementation.

Options paper
On 18 October 2018 the Commission published an options paper. The options paper outlined ways the RERT procurement trigger and procurement volumes could be designed and sought stakeholder feedback on these. It also set out how we considered the appropriateness of the reliability standard. All public submissions to the options paper can be found below.

AEMO’s RERT rule change requests
On 9 March 2018 AEMO submitted two rule change requests to the AEMC in relation to the RERT: 

  • the first rule change request sought to extend the period allowed for AEMO to contract for reserves ahead of a projected shortfall, in effect, reinstating the long-notice RERT. The Commission considered this as an urgent request, and made a final rule to reinstate the long-notice RERT on 21 June 2018. This allows AEMO to use the long-notice RERT to procure reserves for the upcoming summer.
  • the second rule change request (i.e. this rule change request) proposes broader changes to the RERT framework and is subject to a separate rule change request process. This was initiated on 21 June 2018.
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Documentation