On 9 December 2010 the AEMC gave notice under section 95 of the National Electricity Law of the commencement of consultation on the Application of Dual Marginal Loss Factors Rule change proposal.

A Staff Consultation paper has been published by the AEMC to inform discussion of this Rule change proposal. Stakeholders are invited to provide comment on the Rule change proposal and the Staff Consultation Paper. Submissions must be received by 13 January 2011.

On 7 October 2010, the Australian Energy Market Operator (AEMO) submitted a Rule change to the AEMC regarding the calculation and application of intra-regional marginal loss factors (MLFs).

The Rule change request seeks to amend the Rules to allow AEMO to calculate and apply two separate average volume weighted MLFs for specific connection points; one calculated and applied to the energy generated at a connection point, the other calculated and applied to the energy consumed at a connection point.

AEMO seek to apply this approach only at those connection points where the difference between the annual energy consumed and energy generated is 30% or less of the annual energy generated at that connection point (the 30% Net Energy Balance, or 30% NEB).

AEMO state that the current requirement to calculate and apply a single, volume weighted MLF may give rise to inaccurate MLFs at those connection points where the 30% NEB is met. Such inaccurate MLFs may create inefficiencies in the process of dispatch, which may give rise to inefficient pricing of energy for consumers as well as creating inefficient operational and investment incentives for market participants.

AEMO state that the application of two separate volume weighted MLFs at those connection points where the 30% NEB is met will provide the optimal solution to this identified issue.

All enquiries in relation to this project should be addressed to Christiaan Zuur on 02 8296 7800 or at christiaan.zuur@aemc.gov.au.