On 5 July 2010, the AEMC provided the Reliability Panel (Panel) with the terms of reference for a review of the Reliability and Emergency Reserve Trader (RERT) in accordance with clause 3.20.9 of the National Electricity Rules.

On 21 April 2011 the Panel published its Final Report which recommended that the RERT expire on 30 June 2013. In addition, the Panel recommended that the requirement for the review of the RERT be removed from the Rules.

The Panel considered that the RERT is not required to ensure the reliability of the electricity supply meets the Reliability Standard. Market performance to date has adequately ensured reliability, while forecasts expect sufficient reserves to maintain reliability for a number of years in most regions.

The Panel noted that there are some stakeholders whose core business may be affected by the expiration of the RERT and therefore recommended that the RERT be extended for one year as a transitional arrangement.

The Panel considered that allowing the RERT to expire will promote more efficient use of, and investment in, capacity and will remove inefficient costs for consumers.

Background

The RERT is a mechanism in the Rules that allows AEMO to contract for capacity reserves when a shortfall of reserve is projected, up to nine months in advance. The RERT currently has a sunset date in the Rules of 30 June 2012, with a requirement for the Panel to review the need for the RERT by 30 June 2011.

On 3 August 2010 the Panel published an Issues Paper for consultation. The Issues Paper outlines the background to the RERT and key issues for consideration. Submissions on the Issues Paper closed on 17 September 2010.

The Panel held a Public Forum in Melbourne on 2 September 2010 to discuss the Issues Paper. The Public Forum provided an opportunity for interested stakeholders to present their comments on the Issues Paper to the Reliability Panel. There was one stakeholder presentation from the NGF.

On 24 December, the Panel published its Draft Report. The Draft Report presented the Panel's draft recommendation to extend the sunset date of the current RERT until 30 June 2013.

On balance, the Panel's draft recommendation was that the RERT should be extended for one year, and should expire on 30 June 2013. The Panel also recommended that the provisions for the Panel to review the RERT be removed from the Rules. The Panel considered that there is a role for the RERT in the short term, but that it should not be maintained in the longer term.

The Panel held a second Public Forum in Melbourne on Thursday, 3 March 2011 to discuss the Draft Report. The Public Forum provided an opportunity for interested stakeholders to present their comments on the Draft Report to the Reliability Panel. There were no stakeholder presentations at this forum.