The Australian Energy Market Commission (AEMC) has made a final decision on a claim for compensation for direct costs from Basslink Pty Ltd (Basslink) due to the application of the administered price cap in June 2022.
The National Electricity Rules (NER) under clause 3.14.6 and the AEMC compensation guidelines set out a process for market participants to claim compensation for certain losses during an administered price period where the administered price cap (APC) or administered floor price is applied.
The administered pricing compensation framework is designed to maintain the incentive for participants such as generators, scheduled network service providers, scheduled loads, ancillary service providers and demand response service providers to supply or consume energy or services.
During the June 2022 administered pricing period, Basslink, which is a 500MW interconnector between Tasmania and Victoria, transported electricity at around its full capacity to the mainland. This involved Basslink purchasing energy at the higher uncapped price in Tasmania and transporting that energy into the mainland regions that needed the energy, at a lower price. This resulted in Basslink incurring net losses while supplying energy into the market.
The administered pricing compensation framework ensures that eligible claimants in these circumstances, who have contributed to maintaining reliability during a critical period while the APC was in place, are adequately compensated.
The AEMC has determined that Basslink is entitled to compensation in respect of its compensation claim for direct costs and the amount of compensation that Basslink is entitled to is $15,257,754.
The AEMC will write to the Australian Energy Market Operator (AEMO) to advise of the total amount of compensation payable to Basslink. AEMO will then recover the cost of compensation from market customers who purchased energy from the spot market in the relevant eligibility periods in the region(s) in which the administered price period applied.
This decision is not indicative of any future decisions. The AEMC will consider the merits of each claim on a case-by-case basis.
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