On 21 May 2008, following the second round consultation process, the AEMC determined the final schedule which specifies the APC. The AEMC determined this schedule in accordance with clause 3.14.1(a) of the National Electricity Rules (Rules).

In this schedule, the AEMC determined that the APC is $300/MWh for all regions in the National Electricity Market (NEM), for all time periods.
The AEMC anticipated that it will review the APC schedule periodically when it considers necessary, but at least every three years. The AEMC considers such revision would appropriately negate the need for any indexation of the APC.

This APC schedule also replaced the Tasmanian derogation under clause 9.45.2 of the Rules.
The revised APC schedule became effective from the trading interval ending 4:30 AM Eastern Standard Time on 25 May 2008.

A final determination report was published in accordance with clause 8.9(k) of the Rules.

Background

The AEMC conducted a consultation on the schedule for the APC as required under clause 3.14.1(a) of the Rules and sought comments (as part of the second round consultation process) from Market Participants, including Intending Participants.

Clause 3.14.1(a) of the Rules states:

“In conjunction with each participating jurisdiction, and after consulting Market Participants in accordance with the Rules consultation procedures, the AEMC must develop, authorise and publish and may vary from time to time a schedule to specify an administered price cap for each region to apply to spot prices and market ancillary service prices and to be used as described in this rule 3.14.”

The objective of the consultation was to review and clarify the schedule for the APC. As required under clause 3.14.1(a), the schedule was be developed in conjunction with each NEM jurisdiction (namely Victoria, NSW, ACT, QLD, South Australia and Tasmania).

Prior to this schedule for the APC becoming effective, the schedule last published by NECA (under the then National Electricity Code (Code)), remained in force. That schedule is:

“The administered price cap is:

• $100/MWh between 7.00am and 11.00pm on business days; and
• $50/MWh at other times.”

Consultation Process

The consultation processes for this review were as follows:

• 7 January 2008 - end of first round consultation;
• 22 February 2008 - AEMC published its draft report;
• 7 April 2008 – end of second round consultation;
• by 22 May 2008 – AEMC published its final report.
  

Matters Consulted Upon

The AEMC conducted a broad review as to the level of the APC in all NEM jurisdictions. In the first round consultation process, submissions were sought from stakeholders as to:

1. The criteria to be taken into account when determining the level of the APC. For example, policy objectives that the APC was, or should be, designed to realise.

2. The level of the APC given the above criteria and policy objectives.

Draft Report and Second Round Consultation

Following the first round consultation process, the AEMC published a Draft Report in accordance with clause 8.9(g) of the Rules which determined a draft schedule for the APC.

The draft APC was $300/MWh for all regions in the NEM, for all time periods.

The APC schedule was proposed to take effect immediately following the publication of the final determination. Comments were sought from NEMMCO and market participants as to whether this implementation time is appropriate and feasible.

The AEMC’s draft determination is contained in the Draft Report.

Final Determination for the Schedule for the Administered Price Cap (APC)

On 21 May 2008, following the second round consultation process, the AEMC determined the final schedule which specifies the APC. The AEMC determined this schedule in accordance with clause 3.14.1(a) of the National Electricity Rules (Rules).

In this schedule, the AEMC determined that the APC is $300/MWh for all regions in the National Electricity Market (NEM), for all time periods.

The AEMC anticipated that it will review the APC schedule periodically when it considers necessary, but at least every three years. The AEMC considered such revision would appropriately negate the need for any indexation of the APC.

This APC schedule also replaced the Tasmanian derogation under clause 9.45.2 of the Rules.

The revised APC schedule became effective from the trading interval ending 4:30 AM Eastern Standard Time on 25 May 2008.

A final determination report was published in accordance with clause 8.9(k) of the Rules