Rule Change: Completed
Overview
On 19 March 2015, the Australian Energy Market Commission made a final rule to refine the existing requirements on generators to specify the minimum rates at which they may increase or decrease output.
Ramp rates are specified by generators as a component of the offers they make to the market, and govern the manner in which generation dispatch levels can be physically changed through time.
The Commission’s final rule applies a consistent framework to determine the minimum ramp rate requirements for all individual physical generating units. This ensures that the same minimum ramp rate requirements are applied regardless of whether a generator has elected to combine individual physical generating units into a single aggregated generating unit for the purposes of the market dispatch process.
This final rule will apply from 1 July 2016. This date has been selected to provide sufficient time for the Australian Energy Market Operator’s systems and procedures to be updated and for participants to adjust to the new minimum ramp rate requirements.
Background
On 13 February 2014, the AEMC commenced consultation on a rule change request submitted by the Australian Energy Regulator (AER) proposing a requirement for generator ramp rates and dispatch inflexibility profiles to reflect the technical capabilities of generating plant. The AER’s proposal reflected its concerns that, at times, generators use ramp rates to achieve commercial outcomes that can lead to inefficiencies in the wholesale market and in the management of system security.
A consultation paper was published to facilitate consultation on the key issues in the rule change request along with a notice extending the period of time for publication of the draft determination. The period for submissions on the consultation paper closed on 27 March 2014.
On 5 May 2014, the Commission held a stakeholder forum in Melbourne to facilitate discussion on the key issues in the rule change request. Documents from the forum including stakeholder presentations are provided below. Stakeholder views on the rule change request on bidding in good faith were also discussed as part of the stakeholder forum. Further details on this rule change request can be found here.
On 28 August 2014, the Commission made a draft determination to make a more preferable draft rule following its consideration of the AER’s rule change request. This reflected the Commission’s view that a change as extensive as that proposed by the AER might not be warranted, and its concerns that the proposed rule might be difficult to apply in practice. However, in examining and consulting on the rule change request, the Commission concluded that the existing provisions governing ramp rates may distort competitive market outcomes and investment signals. The Commission’s more preferable draft rule therefore sought to refine the current arrangements to address this issue.
The Commission’s more preferable draft rule required that ramp rates provided by scheduled and semi-scheduled generators should be at least one per cent of maximum generation capacity per minute. Such revised requirements would be applied consistently and proportionately, regardless of generator size, plant configuration or technology type. Submissions on the Commission’s draft determination closed on 9 October 2014.
Submissions to the draft determination were generally supportive of the Commission’s more preferable draft rule in principle. However, some stakeholders provided evidence that compliance with the more preferable draft rule might not be practicable for some participants.
On 20 November 2014, the AEMC extended the period of time for publication of the final rule determination to 19 March 2015. The Commission considered the extension necessary in light of a number of complex issues raised in submissions to the draft rule determination, particularly its potential impact on large thermal generating units. The new information received in submissions represented a material change in circumstances, and it was appropriate to allow for additional time to fully consider the issues and consult further with stakeholders.
On 18 December 2014, the AEMC published an options paper seeking stakeholders’ comments on two further options that would address the issues raised in submissions to the draft determination in relation to the implementation of the more preferable draft rule. The additional options were designed such that they would still better meet the Commission’s objectives for ramp rate requirements that could be applied more consistently and proportionately than the current rules. The period for submissions on these options closed on 5 February 2015.
On 19 February 2015, the Commission published a report setting out the reasons for the final determination being made more than 12 months following the initiation of the rule change request.