Commission decided to discontinue the Rule making process for the Alternative Snowy Region Boundary Rule change proposal submitted by Macquarie Generation on 6 February 2006. Under clauses 19 and 20 of Schedule 2 to the NEL, the Commission therefore re-exercised the power under section 94 and has determined not to take further action.

Background

On 6 February 2006, the Commission received a Rule proposal from Macquarie Generation regarding a review of the Snowy regional boundary. This proposed an alternative Snowy Region boundary to that proposed by Snowy Hydro in its Snowy Region Boundary Rule change proposal.

On 16 February 2006, the Commission published a notice under section 95 of the NEL commencing initial consultation on the Macquarie Generation proposal. Submissions were due by 24 March 2006.

On 18 May 2006, the Commission issued a notice under section 107 of the NEL extending the period for publication of the draft Rule determination on the Macquarie Generation proposal to change the Snowy regional boundary to 11 August 2006. This timeframe has been extended to allow the Commission adequate time to carry out the modelling and analysis necessary to make its draft determination.

The Commission concurrently considered five Rule change proposals and one reference for Review that related to various aspects of network congestion management. It was essential for this work to be co-ordinated by the Commission in order to deliver a comprehensive “Congestion Management Regime” for the market going forward. The Commission’s Congestion Management Program - Statement of Approach (PDF) provided information and clarity about the way in which the Commission addressed the five congestion related Rule change proposals and the Congestion Management Review in an integrated manner.

Other Rule change proposals that relate to congestion management and region boundaries and the Review can be found at:

• Southern Generators/NEMMCO proposal on Management of negative settlement residues in the Snowy Region
• Ministerial Council for Energy proposal on the Process for Region Change
• Snowy Hydro Ltd proposal on Management of negative settlement residues by re-orientation
• Snowy Hydro Ltd proposal on Abolition of Snowy Region
• Congestion Management Review

On 16 June 2006 the Commission released an Information Disclosure Statement (PDF), which set out the analytical framework, modelling methodology, and assumptions that the Commission proposed to use in quantitative modelling of the Macquarie Generation Rule change proposal on the Snowy region boundary. The results of the modelling exercise were included in the Commission’s draft determination.

Interested stakeholders were invited to make comment on the data inputs, time horizon, and plant expansion methodology outlined in the Statement. Submissions were due by 5 pm on 23 June 2006.

This public consultation process on modelling inputs replaces the Technical Reference Group, formed by the Commission to comment on modelling inputs for the draft Rule determination (PDF) on National Electricity Amendment (Management of negative settlement residues in the Snowy Region) Rule 2006. The Commission’s 16 June 2006 response (PDF) to a letter from Delta Electricity (PDF), agreed to a more transparent public consultation process on the inputs to the Commission’s quantitative modelling.

On 10 August 2006, the Commission issued a notice under section 107 of the NEL extending the period for the making of the draft Rule determination Macquarie Generation proposals to 15 December 2006. This revised timeframe aligned the Commission’s consideration of this Rule change proposal and the Snowy Hydro Abolition of Snowy Region Rule change proposal with the other components of the Congestion Management Program, as described in the Commission’s Statement of Approach, released 6 June 2006. The Commission was of the view that the difficulty in aligning the processes in order to co-ordinate the consideration of these proposals and the Snowy Hydro Abolition of Snowy Region proposal made it in the public interest to extend the periods for the making of the draft determinations to enable the Commission to deliver a comprehensive “Congestion Management Regime”.

In response to a request from the Commission, NEMMCO provided the Commission with its perspective on the steps and timeframes to expeditiously implement a region boundary change in the Snowy region. The Commission sought comment from interested parties on what steps they would need to take to adjust to a new regional boundary structure and the timeframes it would require to implement these changes. The Commission considered these submission in relation to its assessment of the Macquarie Generation proposals. Submissions were due by Friday, 13 October 2006.

On 28 November 2006, the Commission released an Information Disclosure Statement confirming that it would not be publishing a draft Rule determination on Alternative Snowy Region Boundary on or before 15 December 2006. This Statement was in response to a inquiry from NEMMCO regarding a potential clash in the timing of its Settlement Residue Auction on 15 December 2006 and the current publication date of the draft Rule determination on the above Rule change proposal.

On 14 December 2006, the Commission published a notice under section 107 of the NEL extending the period of publication for the draft Rule determination on the Macquarie Generation proposals. The timeframe has been extended from 15 December 2006 to 5 April 2007.

The Commission decided to release separate draft Rule determinations on the Macquarie Generation and Snowy Hydro Abolition of Snowy Region proposals because the Commission’s analysis of the Snowy Hydro proposal was well advanced and can be ready for decision earlier than the more analytically complex Macquarie Generation proposal. The Commission considered it would be beneficial to undertake early consultation on the Snowy Hydro matter, pending release of the Macquarie Generation draft decision.

On 21 February 2007, the Commission received a letter from Macquarie Generation requesting that the Commission considers a modified solution in its Rule change proposal in relation to the Snowy region boundary (Alternative Snowy Region Boundary).

On 5 March 2007, the Commission received a letter from NEMMCO updating the advice it had provided the Commission on the time required to implement a region boundary change involving the Snowy region. In light of further analysis, NEMMCO has revised its estimate of a feasible implementation date from 1 November 2007 to 1 July 2008. Reasons for the revised timeframe are set out in the letter, and will be elaborated further in NEMMCO’s submission to the Abolition of Snowy Region draft Rule determination.

On 5 March 2007, the Commission also received a Rule change proposal from Macquarie Generation, which sought to amend the existing Snowy region boundary by splitting the region in two.

The Commission has decided to discontinue the Rule making process for the Alternative Snowy Region Boundary Rule change proposal submitted by Macquarie Generation on 6 February 2006. Under clauses 19 and 20 of Schedule 2 to the NEL, the Commission re-exercised the power under section 94 and has determined not to take further action. Notice of this decision was published on 22 March 2007.

The Commission determined not to proceed with the Rule making process for this proposal for the following reasons:

• Macquarie Generation, as the proponent of the Rule change proposal, requested the discontinuance of the Alternative Snowy Region Boundary proposal on the grounds that developments more recently have indicated that the new “Snowy Split Region” Macquarie Generation proposal is capable of achieving the same outcome;
• To issue a draft determination for the Alternative Snowy Region Boundary proposal would involve significant expenditure of resources and costs in order to assess a proposal that was not supported in first round consultation and which the proponent itself no longer presses as a proposed solution to the Snowy region boundary issue;
• The Alternative Snowy Region Boundary proposal was originally lodged more than 12 months ago, and has been essentially overtaken by subsequent developments arising from related Rule change proposals and reviews; and
• The Commission is satisfied that the re-making of the decision with the effect of discontinuing the process does not result in any other third party suffering prejudice or being denied procedural fairness.

The Commission informed Macquarie Generation in writing of its decision not to proceed with the Rule making process with respect to the Alternative Snowy Region Boundary Rule change proposal, as required under s.94 (2) of the NEL.