In making its final Rule determination, the Commission largely adopted the Reliability Panel’s Rule change proposal, with some modifications to improve the implementation and governance of the Energy Adequacy Assessment Projection and the Reliability and Emergency Reserve Trader. The Commission also sought to reduce the administrative burden on Scheduled Generators and NEMMCO associated with the EAAP and Reliability and Emergency Reserve Trader.

Background

On 15 February 2008, Reliability Panel submitted a Rule change proposal to the Commission regarding the Reserve Trader arrangements, NEMMCO’s Reliability Directions power, and information mechanisms for projections of energy adequacy and load.

The Reliability Panel’s Rule change proposal sought to:

• introduce a new information mechanism, the Energy Adequacy Assessment Projection, which is a two year projection of energy adequacy;
• replace the existing Reserve Trader arrangements with the Reliability and Emergency Reserve Trader, which is an enhanced reserve trader with a four year sunset period;
• extend the powers in the Rules that allow NEMMCO to issue Reliability Directions, without a sunset period (there is currently an expiry date of 1 July 2008 related to this power in the Rules); and
• require NEMMCO to report to the Reliability Panel each year on the accuracy of the Statement of Opportunities Load Forecasts.

The recommendations contained in this Rule change proposal were initially put forward by the Reliability Panel in its Second Interim Report for the Comprehensive Reliability Review, which was published on 30 August 2007. These recommendations were also considered following a separate request from the Ministerial Council on Energy to the AEMC in June 2007, requesting that the Reliability Panel review and provide advice on the current market arrangements to manage generation input constraints.

The Reliability Panel requested that this Rule change proposal be fast tracked under section 96A of the National Electricity Law (NEL).

On 20 March 2008, the Commission published a notice under section 95 of the NEL advising of its intention to commence the Rule change process and fast track this Rule change proposal under section 96A of the NEL.

Under section 96A of the NEL, once a fast tracked Rule making process has been approved by the Commission, the first round of consultation and option for a public hearing is bypassed. Following the publication of a section 95 notice initiating the Rule change process, the Commission had five weeks to publish a draft Rule determination. Under section 96A of the NEL, once the draft Rule determination has been published, the Rule making process will continue as normal with a second round of consultation and the publication of a final Rule determination. View further details on the fast tracked Rule making process.

On 24 April 2008, the Commission gave notice under section 99 of the NEL of the making of the draft Rule determination and draft Rule on the Reliability Panel's, NEM Reliability Settings: Information, Safety Net and Directions Rule change proposal.

The Commission’s draft Rule accepted most aspects of the Reliability Panel’s proposal. However, the Commission made some modifications to the proposal to improve the governance arrangements and implementation for the EAAP. Specifically, the Commission considered that greater specification in the Rules supported by guidelines produced by NEMMCO was more appropriate than an approach based on more limited specification in the Rules and guidelines produced by the Reliability Panel.

Submissions on the Commission’s draft Rule determination closed on 6 June 2008.

The Commission gave notice under sections 102 and 103 of the National Electricity Law (NEL) of the publication of its final Rule determination and the making of the National Electricity Amendment (NEM Reliability Settings: Information, Safety Net and Directions) Rule 2008 No. 6 on 26 June 2008. This Rule will commence on 1 July 2008.

The four key elements of the Rule include:

• A requirement for NEMMCO to publish a new quarterly information mechanism, the EAAP - which is a two year projection of the impact of generation input constraints on energy availability;
• Replacement of the existing Reserve Trader arrangements with the RERT from 1 July 2008, which is an enhanced reserve trader with a four year sunset period;
• Extension of NEMMCO’s reliability directions powers without a sunset period from 1 July 2008; and
• A requirement for NEMMCO to report annually to the Reliability Panel on the accuracy of its Statement of Opportunities load forecasts and any improvements that have been made to the forecasting process.

In making its final Rule determination, the Commission largely adopted the Reliability Panel’s Rule change proposal, with some modifications to improve the implementation and governance of the EAAP and the RERT. The Commission also sought to reduce the administrative burden on Scheduled Generators and NEMMCO associated with the EAAP and RERT.

The Commission’s reasoning for its decision is set out in its final Rule determination.