The Australian Energy Market Commission (AEMC) is reviewing the electricity compensation frameworks following last year’s market suspension to improve reliability outcomes.
The National Electricity Rules contain several types of compensation frameworks, designed to ensure generators continue producing electricity when supply is constrained.
The directions, administered pricing, and market suspension compensation frameworks were used to varying extents in June 2022, when sustained high prices led to the application of the administered price cap (APC) in Queensland, and later, New South Wales, Victoria and South Australia.
Many market participants later applied for compensation through the Commission and other market bodies. Through this process, several issues were identified with the objectives, methodologies, governance, and administration of the frameworks which may have impeded the incentives for generators to maintain electricity supply.
The Commission is reviewing the compensation frameworks in a holistic manner to ensure generators work cohesively to ensure reliable outcomes for consumers, especially during peak periods.
The Review builds on the work already done on directions compensation, as part of the Improving Security Frameworks for the Energy Transition rule change and it will consider developments in the gas Compensation and Dispute Resolution Frameworks rule change.
Consultation on the review is underway with submissions closing on 1 February 2024. We encourage all interested stakeholders to share their views. For more information and contact details visit the project page here.
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