On 22 October 2015, the Australian Energy Market Commission made a rule that explicitly allows the Australian Energy Market Operator (AEMO) to prepare demand forecasts at the connection point and regional level as part of its National Transmission Planner functions.

The rule also requires AEMO to publish in the National Transmission Network Development Plan database any forecasts it prepares and a sufficient amount of information used to prepare the forecasts to enable an understanding of how the forecasts were developed, subject to confidentiality of the information.

As a consequence of the rule, it will be clear that AEMO can use its information gathering powers in the NEL, namely market information orders and market information notices, to compel persons to provide detailed connection point data to inform the development of its demand forecasts. There is currently some doubt that AEMO can collect this data.

By putting it beyond doubt that AEMO has access to connection point data, the rule may enable AEMO to develop a better understanding of activities occurring within distribution networks, such as the level of embedded generation and storage which may improve AEMO’s demand forecasts.

This may lead to improved transmission network planning forecasts by AEMO and potentially more efficient investment and operation of electricity services by network service providers and other energy market stakeholders such as generators and customers, to the extent that they use the forecasts. Improved demand forecasts may also lead to more informed revenue determinations by the Australian Energy Regulator (AER) which may use the forecasts. Ultimately, these potential outcomes may result in prices for electricity consumers being lower than what they would have been.

Background

On 2 February 2015, the AEMC received a rule change request from the COAG Energy Council seeking to compel persons to provide connection point data and information to AEMO for the purpose of improving AEMO’s long term electricity demand forecasts.

The COAG Energy Council sought to achieve this by expressly recognising demand forecasting at the connection point and regional level as a National Transmission Planner function for AEMO. As a consequence, AEMO would be able to use its existing information gathering powers in the National Electricity Law to compel persons to provide the relevant information.

The rule change request also sought to:

• clarify that AEMO may consult with the AER in developing the forecasts;
• require the resultant demand forecasts to be made available to the public in the National Transmission Network Development Plan database, subject to any of the information being confidential; and
• require AEMO to provide the demand forecasts to the AER upon the AER’s request.

The COAG Energy Council also proposed to amend clause 5.20.5 of the National Electricity Rules such that AEMO could use this clause to seek the information it needs.

On 7 May 2015, the AEMC commenced consultation on the rule change request.  The AEMC received seven submissions on the rule change request.

On 30 July 2015, the AEMC published a draft rule determination on the rule change request which included a draft more preferable rule. The AEMC received five submissions on the draft rule determination and draft more preferable rule.