Status of compensation claim: Final decision made.  

Overview

On 21 June 2022, Snowy Hydro Limited (SHL) submitted a compensation claim to the Australian Energy Market Commission (AEMC) under clause 3.14.6 of the National Electricity Rules (NER). The claim pertains to the administered price period between 12 June 2022 and 15 June 2022, during which the administered price cap was applied in Queensland, New South Wales, Victoria, and South Australia.

SHL claimed compensation for direct costs incurred in operating the following power stations during the administered price period:

• Colongra (NSW)
• Laverton (VIC)
• Valley Power (VIC) 
• Lonsdale (SA)
• Angaston (SA)
• Port Stanvac (SA)

In addition to direct costs, SHL is also claiming compensation for opportunity costs incurred in operating the following power stations during the administered price period:

• Tumut Three (NSW)
• Upper Tumut (NSW)
• Murray (NSW).

As the claim includes both direct and opportunity costs, it is not considered a direct cost only claim.

SHL provided initial supporting information for its claim on 26 October 2022. Since then, it has provided additional documentation, including responses to information requests from the AEMC.

Commencement of formal assessment

On 8 June 2023, the AEMC formally commenced an assessment of the direct cost and opportunity costs claim made under clause 3.14.6(k) of the NER. The statutory notice of commencement is published below.  

Under the NER, the AEMC has:

• 35 business days to publish the claimant’s proposed methodology for determining its opportunity costs, the draft opportunity cost methodology the AEMC proposes to use in determining those costs, and an invitation for written submissions to be made to the AEMC on the draft opportunity cost methodology. 
• 35 business days after submissions close the AEMC to publish its final decision on the methodology for determining the claimant’s opportunity costs, whether compensation should be paid by AEMO in relation to the claim, and if so, the amount of compensation that should be paid.  

On 31 October 2023, 30 November 2023, and on 7 February 2024, the AEMC extended the timeframe for publishing the final decision, under clause 3.14.6(t) of the NER due to the complexity of the claim. The statutory notices for extension are published below.

Consultation

In accordance with the NER, the AEMC published its draft opportunity cost methodology on 14 September 2023 for SHL’s opportunity costs claim. The AEMC concurrently assessed compensation claims for both Snowy Hydro Limited and Delta, and the draft opportunity cost methodology addresses both claims.

The AEMC invited stakeholders to submit their feedback on the draft opportunity cost methodology. Submissions closed on 13 October 2023, and the AEMC received a total of three submissions related to SHL’s claim, which are published below.

In accordance with the NER 3.14.6(m), the AEMC is required to consult with the claimant before making its final decision. In satisfying this requirement, the AEMC provided a draft decision to SHL on 20 December 2023. SHL submitted its response to the draft decision on 24 February 2024. The draft decision is not published as it is intended to facilitate consultation between the claimant and the AEMC only.

Final decision

On 16 May 2024, the AEMC published its final decision regarding SHL's compensation claim for both direct and opportunity costs incurred during the administered price period between 12 June 2022 and 15 June 2022, when the administered price cap was applied in Queensland, New South Wales, Victoria, and South Australia.

For more information, see the final decision document published below.

Note: SHL requested confidentiality for specific elements of its compensation claim, asserting that the information is commercially sensitive. In accordance with that claim, the published decision document redacts the confidential information to protect those interests while maintaining transparency to the extent possible.