The AEMC is considering changing the calculation of liable load under the Retailer Reliability Obligation (RRO).
This rule change request was submitted by the Australian Energy Market Operator (AEMO) to remove unaccounted for energy (UFE) from the calculation of ‘liable load’, which is used in determining compliance with the RRO.
The RRO has been a mechanism promoting reliability of the national electricity market since 1 July 2019. It obliges electricity retailers to contract with generators or ‘on demand’ resources to cover projected electricity supply shortfalls.
When a new framework for settlements in the NEM, known as Global Settlement, starts on 1 May 2022, this will shift the way that UFE is allocated. Consequently, if no change is made to the rules, UFE will be included in the calculation of retailers’ liable load under the RRO.
AEMO considers UFE a source of variability and uncertainty and thus proposes it should be removed when calculating liable load.
Background: What is the UFE and Global Settlement?
UFE refers to residual electricity losses and includes unaccounted for technical losses, commercial losses and meter profiling errors. Historically, UFE was billed to the first retailer that existed in a local distribution area known as the ‘local retailer’ under a ‘settlements by difference’ framework. Given the local retailer was responsible for all UFE in a local area, other retailers were not required to account for UFE when planning their liable load under the RRO.
However, with the introduction of Global Settlement on 1 May 2022, all retailers will be allocated a share of UFE in a distribution area depending on the loss-adjusted metered electricity consumed by their customers. UFE will therefore be included in the calculation of retailers’ liable load under the RRO. AEMO considers this introduce uncertainty when retailers enter into contracts to ensure they are compliant with the RRO.
The AEMC proposes to expedite this rule change on the basis that removing UFE from the calculation of liable load under the RRO is non-controversial because it is not likely to have a significant effect on the NEM. The AEMC invites stakeholders to make a submission on the proposed changes, and this expedited rule change process, with submissions closing 25 November 2021. Written requests objecting to use the expedited process need to be received by 11 November 2021.
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