On 24 November 2016, the Australian Energy Market Commission (AEMC) made a final rule, which is a more preferable rule, in relation to the Demand Response Mechanism and Ancillary Services Unbundling rule change request received from the COAG Energy Council.
The final rule provides for a new type of market participant – a market ancillary service provider – to offer customers’ loads into the frequency control ancillary services (FCAS) markets. A market ancillary service provider will not need to be a customer’s retailer to offer such demand response services. The market ancillary service provider is required to satisfy certain registration requirements and deliver FCAS services in accordance with AEMO’s specifications just as any other market participant currently is required to do.
In light of the absence of any regulatory barriers in the Rules to the uptake of demand side participant, the Commission has not made a rule to implement the proposed demand response mechanism. The Commission considers the benefits associated with the proposed mechanism can be achieved without the need for a regulatory mechanism in the wholesale market, particularly as there are no barriers in the Rules to demand side participation in the market.
The final rule amends certain provisions in Chapters 2 and 3 of the National Electricity Rules (NER) with effect from 1 July 2017. There are also transitional arrangements to allow AEMO to establish appropriate registration fees prior to the rule commencing.
On 30 March 2015, the AEMC received a rule change request from the COAG Energy Council seeking to create a demand response mechanism in the National Electricity Market (NEM) and to unbundle the provision of ancillary services from the purchase and sale of electricity.
The AEMC published the rule change request, and consultation paper on 5 November 2015. Twenty four submissions were received from stakeholders, and these can be found below.
On 18 February 2016, the Commission published a notice under the NEL to extend the time for making the draft determination for this rule change, until 9 June 2016. Further notices were published on 2 June 2016 and 21 July 2016 that the time for making the draft determination was further extended to 28 July 2016 and 1 September 2016, respectively.
Draft Determination and Draft rule
On 1 September 2016, the AEMC published its draft rule determination to make a more preferable draft rule in response to the rule change request from the COAG Energy Council. Sixteen submissions were received from stakeholders in response to the draft determination and draft rule, and these can be found below.