On 8 November 2007, the Commission gave notice under sections 93 and 102 of the NEL of the making of a single Rule determination for this proposal and the Split Snowy Region proposal. The Commission confirmed its draft decision that the proposal did not more effectively promote improvements in competition and efficiency in the NEM, and therefore the long term interests of electricity consumers, when compared to the Abolition of Snowy Region alternative.

Background

On 15 March 2007, the Commission received a Rule change proposal from a group of generators called the “Southern Generators”, which sought to make the congestion pricing and negative residue management arrangements for the Snowy region currently contained in a derogation in Part 8 of Chapter 8A into a permanent arrangement in Chapter 3 of the National Electricity Rules (Rules).

The Southern Generators are comprised of: Loy Yang Marketing Management Company Pty. Ltd., AGL Hydro Pty. Ltd., International Power (Hazelwood, Synergen, Pelican Point and Loy Yang B), TRUenergy Pty. Ltd., Flinders Power, and Hydro Tasmania.

This proposal has been proposed as an alternative to the Snowy region boundary change proposals from Snowy Hydro Abolition of Snowy Region and Macquarie Generation Alternative Snowy Region Boundary and Split Snowy Region.

On 22 March 2007, the Commission published a notice under section 95 of the NEL commencing first round consultation on this proposal. The notice reflected the Commission’s decision to commence the Rule change process under section 94 of the NEL for this proposal. Interested parties were invited to provide submissions on the Rule change proposal by 30 April 2007. The close of submissions on this proposal was aligned with the close of second round submissions on the Abolition of Snowy Region draft Rule determination (PDF) and Split Snowy Region proposal (PDF).

On 28 March 2007, the Commission released its updated schedule (PDF) for its work on congestion management. The updated schedule provided interested parties with an opportunity to consider the interrelated issues associated with the Congestion Management Review, the MCE regional boundaries Rule change proposal and the various Rule change proposals in relation to the Snowy region boundary in an integrated manner.

On 10 May 2007, the Commission published a notice under section 107 of the NEL extending the period for publication of the draft Rule determination on the Congestion Pricing and Negative Residue Management Arrangements for the Snowy Region to 30 August 2007. As conveyed in its March 2007 Updated Schedule (PDF), the Commission considered this extension was in the best interests of consumers as it provided interested parties with an opportunity to consider the interrelated issues associated with the Congestion Management Review, the MCE regional boundaries Rule change proposal and the various Rule change proposals in relation to the Snowy region boundary in an integrated manner.

On 30 August 2007, the Commission gave notice under sections 93 and 99 of the NEL of the making of a single draft Rule determination for this proposal and the Split Snowy Region. The Commission was not satisfied that when compared to the Abolition of Snowy Region proposal this proposal from the Southern Generators would more effectively promote improvements in competition and efficiency in the NEM, and therefore more effectively promote the long term interests of electricity consumers. The reasons for the Commission’s decision not to accept the proposed Rule are presented in its draft Rule determination. The Commission also commissioned Professor Richard Green to undertake a due diligence review of the quantitative modelling used to inform the Commission’s decision.

No requests for a hearing on the draft Rule determination were received by the Commission before Thursday, 6 September 2007. Submissions on the draft Rule determination closed on Tuesday, 16 October 2007.

On 8 November 2007, the Commission gave notice under sections 93 and 102 of the NEL of the making of a single Rule determination for this proposal and the Split Snowy Region proposal. The Commission confirmed its draft decision that the proposal did not more effectively promote improvements in competition and efficiency in the NEM, and therefore the long term interests of electricity consumers, when compared to the Abolition of Snowy Region alternative.