On 17 December 2020, the Australian Energy Market Commission (AEMC) made a final rule and determination to amend compensation arrangements in the National Electricity Rules (NER) for participants directed to provide services other than energy and market ancillary services (currently referred to as “other services” and referred to as “other compensable services” in the final rule). Other compensable services include, for example, a direction for a battery to maintain a specific state of charge for system security purposes.

Final determination and rule

The final rule reduces administrative burden on AEMO and registered participants by amending the compensation framework for other compensable services from two steps to one step.

The final rule also makes other amendments that improve transparency, predictability, consistency and the allocation of risk, including:

• clarifying the test for how AEMO classifies a direction, which determines the relevant compensation framework
• adding an obligation on AEMO to notify the directed participant of its determination of whether a compensable service was provided and allowing the directed participant to make a submission in response
• simplifying the factors that need to be taken into account in determining fair payment compensation in the new one-step process.

Rule change request from AEMO

On 19 September 2019, AEMO submitted a rule change request for the NER to be amended in relation to the determination of compensation following directions for services other than energy and market ancillary services. 

Currently, when a participant is directed to provide other compensable services (something which has occurred infrequently until recently), they may be compensated under the “fair payment price” framework. Following this initial compensation process, if a directed participant is still out of pocket, it may lodge a claim for additional compensation through a separate second process. 

AEMO considers that this two-step process is an unnecessary delay in finalising compensation for directed participants and proposed a one-step process, where the amount of compensation could be determined at the same time.

Related rule changes

The consideration of this rule change request is part of a wider Commission work program updating frameworks for interventions in the NEM.