Draft AEMC Determination Welcomed

The Australian Energy Council welcomes the Australian Energy Market Commission’s (AEMC’s) Draft Determination on a National Electricity Rule change to enhance the Reliability and Emergency Reserve Trader (RERT) mechanism.

The Australian Energy Council’s General Manager Policy, Ben Skinner, said that the Draft Determination sought to balance the need to have sufficient reserves in place when needed, whilst minimising costs to energy users.

The reserve trader mechanism allows the Australian Energy Market Operator (AEMO) to access additional electricity reserves, typically demand-side response and emergency diesel generators, to use as a last resort in regions at times of very high demand or limited supply.

Mr Skinner said the vast majority of generation to meet demand is provided by generators operating within the market. The RERT is a form of “top up” used when the market is assessed to be outside the reliability standard.

“This occurred in the last two summers in Victoria and South Australia, following the closure of coal plants, but fortunately, current forecasts suggest that the standard can be met from the market alone for the next few summers,” he said.

The AEMC had considered a proposal to convert the RERT to a “strategic reserve” that would operate continuously in all states instead of being called on as required.

“There can be a significant cost in acquiring reserves whether they are actually needed or not and these are passed on to consumers in the state where it is used.

“The RERT reduces, but can’t remove, the risk of customer interruptions. On 25 January this year extreme conditions combined with an unusually high number of power units being unavailable. The RERT was active but could not make up the entire shortfall and so unfortunately some customers were interrupted.

“The RERT also does not address the 96 per cent of supply interruptions caused by local network outages.

“This determination considers the relevant issues and proposes a number of sensible, but limited improvements to the existing RERT. We look forward to making a formal submission.”

About the Australian Energy Council

The Council represents 23 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.