Rule Changes: Open

Secondary trading of settlement residue distribution units

Reference:
ERC0220
Stage:
Publication of Draft Determination
Proponents:
Westpac Banking Corporation
Project Leader:
Istvan Szabo
Date initiated:
11-Apr-2017
Overview

On 18 July 2017 the Australian Energy Market Commission (AEMC) made a draft rule that allows for, but does not mandate, the introduction of secondary trading of settlement residue distribution units via the same auction process already facilitated by the Australian Energy Market Operator (AEMO). The draft rule also protects consumers from bearing any additional risk arising from secondary trading.

On 18 July 2017 the Australian Energy Market Commission (AEMC) made a draft rule that allows for, but does not mandate, the introduction of secondary trading of settlement residue distribution units via the same auction process already facilitated by the Australian Energy Market Operator (AEMO). The draft rule also protects consumers from bearing any additional risk arising from secondary trading.

The draft rule, which is a more preferable rule, addresses the same issues as rule proponent’s proposed rule, but takes a different approach with regard to the consequences of any additional risks that may arise in relation to secondary trading.

The draft rule:

  • enables auction participants to offer their previously purchased units for sale at subsequent auctions facilitated by AEMO
  • requires AEMO to distribute auction proceeds to either the relevant transmission network service provider (TNSP) or auction participant, as the case may be
  • requires AEMO to pay the relevant auction proceeds associated with the primary auction to the TNSP prior to paying out any auction proceeds to any secondary seller
  • prohibits the auction rules from placing additional risks related to secondary trading on AEMO and TNSPs.

Submissions to the draft rule determination are due by 29 August 2017.

Background

On 16 December 2016 the AEMC received a rule change request from Westpac in relation to secondary trading of settlements residue distribution units.

The rule change request was aimed at amending the National Electricity Rules (NER) to enable, but not require AEMO to provide a platform for secondary trading of units. The proposal included the possibility for AEMO to recover money from TNSPs, if payments fall short because of an auction participant default.

On 11 April, the AEMC has published a consultation paper setting out the issues raised by the rule change request. Ten submissions were received to the consultation paper. The draft determination is informed by these stakeholder submissions.

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