On 9 September 2021, the Australian Energy Market Commission (AEMC or Commission) made a final determination on the Contingency arrangements for five minute settlement (5MS) implementation rule change request submitted by the Australian Energy Market Operator (AEMO).

The Commission’s final determination is to make no rule. 5MS and global settlements (GS) soft start will therefore begin on 1 October 2021, as scheduled.

The rule change request

On 30 July 2021, AEMO submitted a rule change request proposing an urgent rule to provide contingency options for a potential delay to the implementation of 5MS and GS. AEMO sought to delay the implementation of these rules if an issue occurred that it could not manage to allow the successful commencement of 5MS on 1 October 2021.

AEMO intended to provide a ‘5MS start notice’ by 1 September 2021 stating if an issue has occurred, and if an issue has occurred, the time required to remedy the issue and a recommended alternative start date. AEMO considered three scenarios may arise:

• No delay
• Short delay (recommend alternative commencement on 1 December 2021)
• Extended delay (recommend alternative commencement on either 1 February or 1 April 2022).

The final determination

The Commission's final rule determination in relation to the contingency arrangements for 5MS implementation rule change request is to make no rule. 5MS will therefore commence on 1 October 2021, as currently scheduled.

Having regard to the issues raised in submissions, including AEMO's '5MS start notice', the Commission is satisfied that no rule will contribute to the achievement of the NEO for the following reasons:

• AEMO's '5MS start notice' provided as a submission on 1 September 2021, recommended no delay was needed and 5MS should commence on 1 October 2021.
• no delay to commencement ensures the benefits of 5MS and GS can be realised as early as possible
• no delay will allow industry implementation programs to continue as scheduled, thereby minimising additional implementation costs
• there will be no disruption to the contracts market as a result of a delay, or increased risk for summer operations
• no delay will have the lowest impact on other regulatory reforms and ensures the current regulatory reform implementation schedule can proceed unchanged.

While not proposing a delay, some stakeholders raised concerns that risks remained for the successful commencement of 5MS on 1 October, particularly for market participants. The Commission notes AEMO has identified risk mitigation strategies and contingency arrangements to address these concerns and encourages industry to continue to engage in these processes.

Background on the rule change process

On 30 July 2021, AEMO submitted a rule change request proposing an urgent rule change to potentially delay the implementation of 5MS. 

On 5 August 2021 the AEMC published a consultation paper seeking feedback on the proposed rule change.

The Commission determined that the rule change be considered under an expedited rule change process as it was a request for an urgent rule. The Commission received no objection to the use of the expedited rule change process.

On 9 August 2021, the AEMC and AEMO hosted a public webinar.

The AEMC received 10 submissions to the consultation paper for this rule change request.