Rule Change: Completed
On 21 June 2018, the Commission made a final rule which promotes reliability in the NEM by increasing the lead time available for AEMO to procure out-of-market reserves through the Reliability and Emergency Reserve Trader (RERT), to nine months ahead of a projected shortfall. This effectively reinstates what was known as the long-notice 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.
Overview of final rule
The key features of the final rule are:
- an increase in the procurement lead time available to AEMO to procure the RERT from 10 weeks to nine months ahead of a projected reserve shortfall (effectively reinstating the long-notice RERT) with effect from 13 July 2018
- a transitional rule that amends the RERT guidelines made by the Reliability Panel to reflect the reinstatement of the long-notice RERT and requires the Reliability Panel to publish the RERT guidelines amended to reflect the changes made under the rule by 13 July 2018 (the date the long-notice RERT is reinstated)
- a transitional rule that requires AEMO to amend its RERT procedures to reflect the final rule and amended guidelines by 13 July 2018. The rule requires AEMO to consult on the proposed amendments to its RERT procedures for a minimum of two weeks prior to the revised procedures taking effect.
The final rule will promote reliability since AEMO will be able to, if there is a shortfall, have access to a broader range of reserves than it otherwise would. Reinstating the long-notice RERT may also improve efficiency of the procurement process and put downward pressure on RERT costs, if it is needed.
On 9 March 2018 AEMO submitted two rule change requests to the AEMC in relation to the RERT:
- the first rule change (this rule change request) 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 second rule change request (Enhancement to the RERT) proposes broader changes to the RERT framework and is subject to a separate rule change request process. This was initiated on 21 June 2018.
Process for this rule change
This rule change request was initiated on 26 April 2018 under an expedited process. The Commission did not receive any objections to the expedited process but decided to extend the time for making the final determination by two weeks based on stakeholder feedback.
To facilitate consultation, the AEMC co-hosted a stakeholder teleconference with AEMO on the rule change request on Thursday 3 May 2018. The Commission received 19 submissions to the consultation paper.