Rule Change: Open

Overview

This rule change request from the Australian Energy Market Operator (AEMO) proposes to introduce a voluntary short term forward market to enable participants to contract for electricity in the week leading up to dispatch.
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This rule change request from the Australian Energy Market Operator (AEMO) proposes to introduce a voluntary short term forward market to enable participants to contract for electricity in the week leading up to dispatch. By allowing the trading of electricity contracts closer to real time, the proposed market could give participants more price certainty and enable more demand response to be integrated into the wholesale market.

The proposed voluntary market would:

  • be operated by AEMO
  • facilitate the trading of anonymised short term electricity forward contracts 
  • operate on the Trayport platform
  • offer a range of standardised contract tenures from a day ahead to a week ahead of trading
  • where practicable, use existing NEM settlement, clearing and prudential frameworks.

Extension

On 1 August 2019 the Commission extended the period of time to make the draft determination to 12 December 2019. The Commission considers that this extension is necessary to allow for additional consultation with a broader group of stakeholders and sufficient time to work through the complex policy and legal issues.

Consultation paper

On 11 April 2019 the AEMC published a consultation paper seeking stakeholder feedback on the proposal. Key questions are:

  • how is short term risk currently managed in the NEM and would a short term forward market be beneficial to market participants
  • what design elements should be considered as part of a short term forward market
  • how significant are the implementation costs and what other implementation issues should be considered in the rule change assessment.

Submissions were due by 23 May 2019. Stakeholders were welcomed to use a template for responses.

Background

On 20 December 2018 the AEMC received a rule change request from AEMO for the introduction of a voluntary short term forward market. 

This request was based on a recommendation made by the AEMC in our 2018 Reliability Frameworks Review on how to integrate more demand response into the wholesale electricity market. In addition to a short term forward market, the AEMC also recommended the development of a wholesale demand response mechanism, which is being progressed through a separate rule change process.

For more information see our Reliability work plan.

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