Rule Change: Open

Overview

This rule change request from AEMO proposes a global settlement framework for the demand side of the wholesale electricity market. AEMO is responsible for settlement in the national electricity market - making sure that market generators are paid for the energy they provide and retailers pay for the energy their customers use.  The proposed change to global settlement would treat all retailers equally by allocating a share of ‘unaccounted for energy’  to all retailers in a distribution area. It would also enable AEMO to fully reconcile the market.
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This rule change request from AEMO proposes a global settlement framework for the demand side of the wholesale electricity market. AEMO is responsible for settlement in the national electricity market - making sure that market generators are paid for the energy they provide and retailers pay for the energy their customers use. 

The proposed change to global settlement would treat all retailers equally by allocating a share of ‘unaccounted for energy’  to all retailers in a distribution area. It would also enable AEMO to fully reconcile the market.


Draft determination

On 30 August 2018 the AEMC made a draft rule to move settlements of the demand side of the wholesale electricity market from the current 'settlements by difference' framework to a 'global settlements' framework.  Implementation of the new framework would start on 1 July 2021 to coincide with the start of five minute settlement.

The draft rule, which is a more preferable rule, is in response to a rule change request submitted by the Australian Energy Market Operator (AEMO). The draft rule is generally consistent with AEMO’s rule change request but varies in some specific design elements of global settlements. 

Submissions to the draft determination and draft rule are due by 25 October 2018.

Background

On 16 March 2018 the AEMC received a rule change request from AEMO to amend the National Electricity Rules. The request seeks to apply a 'global settlement' framework to the demand side of the wholesale electricity market. 

The current settlement framework for the demand side of the national electricity market is known as ‘settlement by differencing’. This approach means that the ‘local retailer’ for a distribution area bears the risk and cost for all ‘unaccounted for energy’ (UFE) in its area. UFE includes unaccounted for technical losses, estimation errors and commercial losses. Of these contributors to UFE, local retailers are only able to manage their own commercial losses.   

AEMO proposes that the IT system capability for global settlement should be developed in alignment with the design and build activities already underway for the introduction of five minute settlement on 1 July 2021.

On 10 May 2018 the AEMC published a consultation paper on the rule change request. Stakeholder submissions closed on 5 July 2018 and can be found below.

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Documentation