The Australian Energy Market Commission (AEMC) has made a final decision in relation to a claim for compensation for direct costs from Shell Energy Retail Pty Ltd  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, Shell’s gas peaking plant in Queensland incurred 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 Commission has determined that Shell is entitled to compensation in respect of its compensation claim for direct costs, and that the amount of compensation that Shell is entitled to is $498,871.

The Commission will write to the Australian Energy Market Operator (AEMO) to advise of the total amount of compensation payable to Shell. 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 relevant cost recovery region(s).

This decision is not indicative of any future decisions. The Commission will consider the merits of each claim on a case-by-case basis.

More information, including the final decision document, can be found here. Information about other claims made in relation to the June 2022 event can be found here.

Media: Georgina Kentwell 0411 043 964, Jessica Rich, 0459 918 964, media@aemc.gov.au.