The Australian Energy Market Commission (AEMC) has made a rule to indefinitely extend the Reliability and Emergency Reserve Trader (RERT) arrangements, thereby preserving its safety-net feature within the complement of permanent intervention mechanisms available to the Australian Energy Market Operator (AEMO) to manage power system reliability in the National Electricity Market (NEM). The rule change request, submitted by the COAG Energy Council, sought to extend the operation of the RERT from 30 June 2016 to 30 June 2019.

A key objective in the provision of electricity services in the NEM is the reliable and secure supply of electricity to customers. A reliable power system is one that has a high likelihood of fully servicing the electricity needs of customers. An important determinant of reliability in the NEM is the reliability standard, which is the maximum allowable level of electricity at risk of not being supplied to consumers in any NEM region. In its management of power system reliability, AEMO can use any one of three reliability intervention mechanisms, of which the RERT is one.

The RERT allows AEMO to contract for reserves ahead of a period where reserves are projected to be insufficient to meet the reliability standard (known as a projected reserve shortfall). AEMO is able to dispatch these reserves to manage power system reliability and, where practicable, security. The RERT, or some form of power for the market operator to contract for reserves, has been a feature of the NEM since its commencement in December 1998.

The Commission has made a more preferable Rule, which the Commission is satisfied will, or is likely to, better contribute to the achievement of the NEO than the proposed rule. The key features of the Rule are as follows

• the RERT’s sunset clause will be omitted with effect from 23 June 2016. This means that the RERT arrangements will continue unless and until a rule change amends or omits them;

• the period allowed for AEMO to contract for reserves ahead of a projected reserve shortfall will be shortened to allow greater opportunity for a market response to address that shortfall. The timeframe will reduce from nine months to 10 weeks, from 1 November 2017. This minimises any market distortionary effects of the RERT’s indefinite extension; and

• the Reliability Panel will be required to amend the RERT guidelines and AEMO will be required to amend the RERT procedures to reflect the changes to the RERT arrangements.

In order to avoid any doubt, the Rule provides that the changes do not affect any reserve contract entered into before 1 November 2017.