Have your say on the transmission loss factor framework

Today the AEMC started consultation on two rule change requests from Adani Renewables about how marginal loss factors are calculated and how intra-regional settlement residues are distributed.

When you transport electricity across a network of poles and wires, some of it is lost as heat. Marginal loss factors are calculated so customers don’t pay for power they don’t get.

Specifically, the two rule change requests seek to:

redistribute the allocation of the intra-regional settlement residue so it applies equally between generators and networks users.
change the marginal loss factor calculation methodology to an average loss factor methodology.

The AEMC has consolidated these two rule change requests to enable consideration of broader issues around how the transmission loss factor framework can continue to send the most appropriate signals to investors in the face of power system restructuring.

Submissions on the consultation paper are due by 18 July 2019.

In addition, the AEMC is holding a workshop on 4 July 2019 in Brisbane to gather stakeholder views on the operation of the transmission loss factor framework. If you are interested in attending, or have any questions, please contact Andrew Splatt at andrew.splatt@aemc.gov.au or (02) 8296 0623. Final details for the workshop, including venue, time and agenda, will be provided closer to the date.

Related projects

The AEMC is currently consulting on two related projects:

We are assessing rule change requests on ways to enhance publicly available information about new generation projects to help give investors more certainty. This may help address some current stakeholder concerns with the transmission loss factor framework by providing more information about forthcoming generation projects to allow investors to better forecast potential changes to loss factors. Read a summary of submissions to the consultation paper.
A holistic solution to access to the national grid is being progressed through the AEMC’s Coordination of generation and transmission investment - access and charging review. This review is looking at how to deliver the right amount of new transmission infrastructure in the right place at the right time, to meet future needs. It is part of the AEMC’s broader package of changes to the regulatory framework to support new investment in transmission networks in line with AEMO’s Integrated System Plan. A directions paper on the COGATI access reforms is due to be published later this month for stakeholder input. For more information view the COGATI project timeline.

Media: Bronwyn Rosser, Communication Specialist, 02 8296 7847; 0423 280 341

BACKGROUND

Physical losses are an unavoidable consequence of transporting electricity. When you transport electricity across a network of poles and wires, some of it is lost as heat. The amount of power lost depends on:

the distance of the generator from customers - more power is lost the further it has to travel
the voltage and resistance of the transmission lines - the “quality” of the line
how much power is flowing through the line - a more heavily loaded line means more heat and more losses.

Marginal loss factors aim to reflect actual physical losses so the true cost of transporting power is clear to investors in new generators. They are calculated each year by AEMO in line with principles set out in the National Electricity Rules and in consultation with stakeholders.

As the type and location of generators changes, they are getting different signals about how much of their power will be lost in transportation.

Loss factors have always changed year by year – depending on where new generators are being built and where other generators are closing. What’s changing is the predictability of these loss factors, due to the rapid pace of new generators joining the system and the location of these generators.