The Australian Energy Market Commission is seeking stakeholder comments on options being considered to address the issues raised in the bidding in good faith rule change request.

The National Electricity Rules require that when generators offer electricity to the market, all bids and rebids are made in good faith, such that at the time of making the bid, generators have a genuine intention to honour their bid if the material conditions on which the bid is based remain unchanged. 

Changes to the bidding in good faith provisions proposed by the South Australian Minister for Mineral Resources and Energy are intended to clarify the meaning of the bidding in good faith provisions and thereby improve the ability of the Australian Energy Regulator to enforce them.

The rules that relate to the generator bidding process are fundamental to the operation of the market and the promotion of efficient price outcomes in the interests of consumers.  Any changes to these rules have the potential to significantly affect participants and therefore require careful consideration.

As a consequence, the Commission has added an extra stage of consultation to the normal rule change process prior to the publication of the draft determination, with an options paper released today to assist in determining the appropriate regulatory response to the issues raised by the rule change request.

The options paper discusses the outcomes of analysis undertaken for the Commission to date and tests stakeholders’ views on a number of potential options identified to address the rule change request.

The options set out in the paper fall broadly into one of two categories – a behavioural statement of conduct similar to the good faith provisions, or changes in market design and the bidding process including potential restrictions on rebidding close to real time.

Submissions from stakeholders will assist the Commission in determining the best way to address the issues raised by the rule change request and to ensure any changes to the existing frameworks will lead to more efficient market outcomes in the long term interests of consumers.

Submissions are due by Thursday 12 February 2015.