The AEMC today released a consultation paper on a rule change request seeking to improve administrative processes related to compensation and settlement after AEMO intervenes in the market – for example, when directing a gas or diesel generator on to maintain system strength. 

Generators which have been directed by AEMO to provide services are paid compensation to ensure they are not out of pocket. Other participants affected by the intervention may also be compensated, for example, a generator whose output was constrained to minimise flow-on effects from the direction. Compensation is ultimately paid for by consumers. 

This proposed rule change from AEMO seeks to streamline the cost recovery process by aligning the timetables for compensation and settlement following an intervention. It also proposes to extend the deadline for participants to make additional claims following an intervention which would allow participants more time to assess the impact of intervention events.  

This request was submitted as two separate rule change proposals which have now been consolidated as they both raise issues related to market intervention and settlements.

As the rule change concerns administrative matters rather than larger questions about the interventions framework, the AEMC considers this to be a non-controversial rule change proposal and we are proceeding under an expedited process. 

Subject to any objections to the expedited process, there will only be one round of consultation. Objections to the use of the expedited process must be lodged by 18 April 2019.

Submissions on the rule change request are due by 2 May 2019. A final rule is due on 30 May 2019.

Larger questions about interventions are being examined in the Interventions and system strength consultation paper published today. Through this broader consultation, we are progressing two separate rule change requests from AEMO related to:

  • the threshold which limits the amount of compensation payable to directed and affected participants
  • the application of the ‘regional reference node’ test which is used by AEMO to determine when intervention pricing should apply. Intervention pricing is an estimate of what the spot price would have been if a direction had not happened.

Media: Prudence Anderson, Communication Director, 0404 821 935 or (02) 8296 7817