The Australian Energy Market Commission today published its final rule determination relating to the COAG Energy Council rule change request to revise the compensation arrangements for market participants following the application of an administered price cap and administered floor price.

The Commission has made a final rule in response to the rule change request. The key changes in the final rule are:

  • to introduce new eligibility criteria such that participants can claim compensation from the first trading interval when the wholesale pool price is set by the administered price cap, and continue until the last trading interval of that day, instead of the assessment of compensation on a trading interval basis. This should reduce the incentive for generators to cycle units on and off in a specific trading interval and enhance the reliability and security of supply during an administered price period;
  • to amend the purpose of compensation, such that the only objective relates to reliability and security of supply during an administered price period, as opposed to also having a purpose of compensation relating to encouraging investment;
  • to improve the flexibility, efficiency and transparency of the compensation assessment process; and
  • to include eligibility for ancillary service providers to make a claim for compensation following the application of an administered price period.