Rule Changes: Completed

Five Minute Settlement

Reference:
ERC0201
Proponents:
Sun Metals Corporation Pty Ltd
Decision:
Rule made
Amending rule:
2017 No. 15
Commenced:
01-Jul-2021
Amending chapters:
10, 11, 3, 4, 6, 7, 9
Rule version:
104
Other rule versions:

Overview

Sun Metals submitted a rule change request to reduce the time interval for settlement in the wholesale electricity market from 30 minutes to five minutes.

Sun Metals submitted a rule change request to reduce the time interval for settlement in the wholesale electricity market from 30 minutes to five minutes.

Sun Metals submitted that the mismatch between the dispatch and settlement intervals leads to inefficiencies in the operation and generation mix of the market. Specifically, it:

  • accentuates strategic late rebidding, where generators have been observed to withdraw generation capacity in order to influence price outcomes
  • impedes market entry for fast response generation and demand side response.

On 28 November 2017, the AEMC made a final rule, which is a more preferable rule, to align operational dispatch and financial settlement at five minutes. This will reduce the time interval for financial settlement in the national electricity market from 30 minutes to five minutes. The rule provides a transition period of three years and seven months. Five minute settlement will commence on 1 July 2021.

Aligning dispatch and settlement at five minutes will have the following significant enduring benefits relative to the current arrangements:

  • improved price signals for more efficient generation and use of electricity
  • improved price signals for more efficient investment in capacity and demand response technologies to balance supply and demand
  • improved bidding incentives.

Background

On 19 May 2016, the Commission initiated its assessment of the proposed rule with the publication of a consultation paper for stakeholder comment.

On 22 August 2016, the Commission extended the period of time to make the draft determination on the rule change proposal to 30 March 2017, under section 107 of the National Electricity Law. The Commission considered the extension necessary due to the complexity of the issues raised by the rule change request and stakeholder submissions on the consultation paper.

Following requests from stakeholders, on 2 February 2017 the Commission extended the period of time to make the draft determination on the rule change proposal to 6 July 2017, under section 107 of the National Electricity Law.  The Commission considered this second extension necessary to enable further consultation to better understand the costs and benefits of the proposal and implementation issues.

On 11 April 2017 the Commission published a directions paper to facilitate public consultation and assist stakeholders to make submissions on the rule change request. The directions paper provided details of how five minute settlement could be implemented, subject to stakeholder feedback on detailed costs and benefits. The Commission held a public forum to discuss the directions paper on 4 May 2017 in Sydney. Forty-three submissions were received on the directions paper.

On 4 July 2017, the Commission extended the period of time to make the draft determination on the rule change proposal to 5 September 2017, under section 107 of the National Electricity Law. The Commission considered this extension necessary to adequately consider the issues raised by stakeholders in submissions on the directions paper.

On 5 September 2017 the AEMC published a draft determination and a draft rule on the rule change request. Forty-one submissions were received on the draft determination. 

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Documentation

AEMC documents

AEMO report

AEMC documents

Submissions

Late submissions

AEMC documents

Public forum – 4 May 2017

Submissions

Late Submissions

AEMC Documents

AEMO Documents

AEMC Documents

Submissions

Late Submissions