The Australian Energy Market Commission (AEMC) has made a rule to extend the application of the ‘interim reliability measure’ (IRM) to the Retailer Reliability Obligation (RRO) for three years to support reliability in the electricity system.

The change is set out in a final determination published today following a rule change request by the Australian Energy Market Operator (AEMO).

The AEMC sets the rules for the National Electricity Market (NEM) and provides independent expert energy advice to Australia’s State and Federal Governments. It is strongly focused on providing a framework for a reliable electricity system and affordable electricity prices.

An essential part of this work involves carefully managing reliability as the energy market transitions to meet the needs of households, businesses and industry.

In 2020, on the advice of the Energy Security Board (ESB), federal and state energy ministers endorsed an IRM set at 0.0006 per cent of expected ‘unserved energy’. This measure was established to support the reliability of supply, particularly during a “one-in-10-year summer” event.

The IRM acts as a trigger for two measures designed to provide more certainty on reliability. These measures are the RRO, which encourages retailers to contract with generators to cover their energy demand, and the ‘interim reliability reserve’ (IRR), an “out of market” capacity reserve.

As the power system undergoes its transformation into a high variable renewable energy (VRE) system, reliability risk must be characterised differently. The AEMC recognises the important role played by the IRM, among other reliability tools, in managing ‘tail risk’ or addressing high impact events with a low probability of occurring in the system until 2028.

The AEMC considers the IRM to be a provisional measure until the Reliability Panel has completed its more comprehensive assessment of how tail risk should be managed in the form of a new reliability standard. In response to stakeholder feedback, the AEMC has included transitional arrangements in the final rule to ensure AEMO can request a T-3 Reliability Instrument in time to address any anticipated reliability gaps.

Extensive consultation has occurred to date on the extension of the IRM and the Commission has considered stakeholder views in making its decision to extend the IRM from 2025 to 2028.

View the project page here for more information and contact details.

Media: Jessica Rich, 0459 918 964, media@aemc.gov.au.