On 17 February 2011, the Commission published its final decision on amendments to the compensation guidelines, together with the amended guidelines, in accordance with the transmission consultation procedures. The amended guidelines are effective immediately.

These amendments ensure the compensation guidelines are consistent with the AEMC's obligations under the relevant legislation, reflect experience gained following the practical application of the guidelines to a claim, and provide increased regulatory certainty, transparency and consistency for potential claimants and stakeholders.

The Commission amended the compensation guidelines in the following key areas:

• ensuring the confidentiality section is consistent with the AEMC's obligations to protect confidential information under the relevant legislation;
• including the principles the Commission will apply in exercising its discretion to recover any costs from a claimant;
• clarifying how scheduled load may be eligible to claim compensation and the calculation of that compensation; and
• clarifying the calculation of compensation for scheduled network service providers.

In addition, other minor amendments were made to the compensation guidelines. These include administrative matters, minor drafting corrections, formatting, typographical and grammatical corrections, and the consistent use of acronyms throughout the document.

Background

The Australian Energy Market Commission published "The Determination of Compensation Following the Application of the Administered Price Cap, Market Price Cap, Market Floor Price or Administered Floor Price Guidelines" (compensation guidelines) on 1 July 2009. These compensation guidelines support the operation of clause 3.14.6 of the National Electricity Rules (NER).

NER clause 3.14.6(f) provides that the AEMC may, from time to time, amend or replace the compensation guidelines in accordance with the transmission consultation procedures (rule 6A.20).

Recent application of the compensation guidelines

On 8 September 2010, the Commission determined that compensation is payable to Synergen Power Pty Ltd in relation to its claim for compensation under NER clause 3.14.6. The compensation claim related to the application of the administered price cap during an administered price period in South Australia between 29 January 2009 and 7 February 2009. This was the first compensation claim considered by the Commission under this clause.

Following the practical application of the compensation guidelines for this claim, it was identified that the confidentiality section of the compensation guidelines was inconsistent with the AEMC's obligations to protect confidential information under the Australian Energy Market Commission Establishment Act 2004 (SA) (AEMC Act) and the National Electricity Law (NEL). Therefore, the confidentiality section of the compensation guidelines requires updating.

During the processing of this first compensation claim, other practical matters arose that the AEMC considered should be addressed in the amended compensation guidelines to provide further guidance to potential claimants.

Amendments to the compensation guidelines

On 28 October 2010, the Commission published its draft amended compensation guidelines and explanatory statement, in accordance with the transmission consultation procedures.  Written submissions closed on 10 December 2010.

Related compensation arrangements review

The Commission proposes to initiate a review of arrangements for determining and paying compensation under NER clauses 3.14.6 and 3.15.10 (compensation arrangements review), which will consider the broader issues in determining compensation claims under NER clause 3.14.6 and how AEMO recovers any compensation payable from market customers under NER clause 3.15.10. (The Commission's intention to undertake this review was discussed in its final decision on Synergen Power's compensation claim.)

An outcome of the compensation arrangements review may be proposed Rule changes. As a consequence, further amendments to the compensation guidelines are likely to be required to ensure the guidelines are consistent with any changes to the Rules.