Reliability Panel starts review of reliability standard and settings

30 March 2017

The Australian Energy Market Commission’s Reliability Panel today started its review of the reliability standard and reliability settings, as required under the National Electricity Rules.

Reliability of the power system is about having sufficient capacity to generate and transport electricity to meet consumer demand. Every four years, the Panel conducts a review into the reliability standard and settings – a set of parameters that bear on price, investment and ultimately reliability in the national electricity market.

The reliability standard currently requires there be sufficient generation and transmission interconnection such that 99.998% of annual demand for electricity is expected to be supplied. It is not a regulatory or performance standard that is ‘enforced’ but rather it is a planning standard used to indicate to the market the required level of supply and demand on a regional basis.

The reliability settings are the price mechanisms in the electricity wholesale market: the market price cap, the market floor price, the cumulative price threshold and the administered price cap.

Through this periodic review, the Panel considers whether the reliability standard and settings remain suitable for current market arrangements.

The AEMC has provided the Panel with Terms of Reference for the review, which will determine the settings that will apply from 1 July 2020 to 1 July 2024.

The Panel is cognisant of the pace of change in the energy market. The review will set out the emerging market trends and policy developments and how the Panel proposes to address them. The Panel will also outline any future market or policy conditions that it considers are outside the scope of the review. 

Stakeholders are encouraged to provide input to the review. An issues paper will be published in mid 2017 and the Panel’s draft determination is due to be released in late 2017, both for consultation.

The Panel is required to complete the review by 30 April 2018.

Media: Prudence Anderson, Communication Director, 0404 821 935 or (02) 8296 7817.

 

Reliability Panel

The Reliability Panel's core functions relate to the safety, security and reliability of the national electricity system. The focus of the Panel's work is on determining standards and guidelines which are part of the framework for maintaining a secure and reliable power system. The Panel is chaired by AEMC Commissioner, Mr Neville Henderson. Its members are broadly representative of all stakeholders interested in the operation of the power system and the electricity market including consumer groups, generators, network service providers, retailers and the power system and market operator, AEMO.

Reliability Standard

The reliability standard currently requires there be sufficient generation and transmission interconnection such that 99.998% of annual demand for electricity is expected to be supplied. Put another way, the standard specifies the maximum expected unserved energy (USE) or the amount of electricity demanded by customers which is at risk of not being supplied. It is currently set at 0.002% of the region’s annual energy consumption in a financial year. USE does not include energy that could not be supplied as the result of a system security event or as the result of an outage in the inter-regional transmission or distribution network. This means that customers may experience supply shortages that are not the result of insufficient generation or a lack of interconnection between regions.

 It is not a regulatory or performance standard that is ‘enforced’ but rather it is a planning standard used to indicate to the market the required level of supply to meet demand on a regional basis. The reliability standard was set by the AEMC’s Reliability Panel and is now incorporated into the National Electricity Rules. The Panel reviews the standard every four years. In accordance with the rules, the next review must be completed by 30 April 2018.

State and territory governments set the level of reliability that must be provided by transmission and distribution networks (‘poles and wires’).