On 13 May 2010, the Commission gave notice under section 102 and 103 of the National Electricity Law (NEL) of the making of a final Rule determination and final Rule (the Rule as Made) in relation to the Cost Recovery for "Other" Services Rule Change request. The Commission has determined to make, under sections 103 and 91A of the NEL, a more preferable Rule consistent with the position jointly put forward by AEMO and the NGF. The Rule commences on 1 July 2011, in order to allow sufficient time for the necessary AEMO system changes to be made.

The Rule as Made introduces regionalisation of cost recovery for "other" services, as well as additional guidance around the classification of directions for services by AEMO. The Rule as Made also replaces the reference to the "largest single fixed component of participants fees" with a measurement of "relevant energy" as the basis for determining proportional liability for recovered costs, and introduces limitations on the use of an existing bid price as the basis for determining compensation to a directed participant under clause 3.15.7(g) of the Rules.

The Rule as Made maintains the contents of the draft Rule, with minor drafting amendments clarifying interpretation of clause 3.15.7A(a1) regarding the classification of directions for services by AEMO.

Background

On 13 March 2009 the Commission received a Rule change proposal from NEMMCO (now AEMO) proposing to amend the methodology to recover costs incurred when the AEMO issues directions to scheduled plant or market generating units for other services.  Currently costs for directions for other services are recovered from all Registered Participants in the same proportion as the largest single fixed component of Participant Fees.  The AEMO seeks amendment to clause 3.15.8(g) of the National Electricity Rules so that costs are recovered from Market Customers and Market Generators in the regions benefitting from the direction in proportion to their relevant energy.

On 23 July 2009, the Commission published a notice under section 95 of the National Electricity Law to commence initial consultation on this Rule change proposal.  Submissions to the Rule change proposal closed on 24 August 2009.  The Commission also published a Consultation Paper to provide guidance to stakeholders in responding to the first round of consultation.

On 24 August 2009, the Commission received a submission from the National Generators Forum (NGF).  The submission proposes a wider set of changes relating to how directions are classified more generally and how consequent costs are recovered.  The Commission sought comment from stakeholders on the NGF's submission by 16 September 2009.  A submission responding to the NGF proposal was received from AEMO on 7 September 2009.

On 29 October 2009, the Commission published a notice under section 107 of the NEL. The notice extends the time for making the draft Rule determination to 26 November 2009.  The AEMC concluded that this extension of time was necessary in order to properly consider and analyse new and complex issues arising out the submission from NGF and the subsequent submission from AEMO.

The Commission received further submissions from AEMO and the NGF on the 13th and 16th of November respectively, reflecting the outcome of discussions between the two parties regarding the AEMO Rule change proposal.

In light of these additional submissions, and taking into consideration analysis to date, the Commission concluded that additional public consultation was warranted, prior to making a draft Rule determination.  In order to allow time for consultation on a range of new and complex issues, the Commission issued a notice under section 107 of the NEL on 26 November 2009, extending the period of time for making its draft Rule determination until 25 February 2010.

A second consultation paper was published on 17 December 2009, seeking stakeholder views on a number of specific issues arising out of the additional submissions made by AEMO and the NGF.  Submissions in response to the second consultation paper closed on 4 February 2010.

The Commission gave notice under section 99 of the NEL on 25 February 2010 of the making of its draft Rule determination and Draft Rule.  The Commission determined not to make the Rule proposed by the Rule Proponent and to make a proposed more preferable Rule consistent with the position put forward by both AEMO and the NGF.

Submissions on the draft Rule closed on 8 April 2010, with submissions received from AEMO and the NGF.