On 12 September 2017 the AEMC published a final rule determination on the consolidated rule change request received from Snowy Hydro and ENGIE. The central issue raised by the rule change requests relates to the accuracy of pre-dispatch demand and price forecasting. In particular, the proponents consider that the behaviour of non-scheduled generation and price-responsive load cause pre-dispatch forecasting inaccuracies leading to inefficiencies in the market.

The Commission decided not to make a final rule. The Commission found that the materiality of the issue raised by the rule change requests was insufficient to warrant making any proposed changes.

The analysis undertaken by the AEMC found:

• the proposed changes would only apply to a limited number of generators and loads and would therefore have limited impact on pre-dispatch forecasting accuracy
• AEMO’s pre-dispatch demand forecasting is generally accurate at dispatch, meaning an efficient quantity of generation is dispatched
• price forecasting is less accurate, but this is to be expected as the pre-dispatch forecasts are a signalling process that assists market participants in planning and adjusting their generation and consumption
• the evidence linking forecasting inaccuracy to the actions of non-scheduled generation and load was inconclusive, and other causes of inaccuracy were identifiable, including the actions of scheduled generators and more general forecasting issues
• the costs of scheduling may be material to loads and smaller generators, and may flow through to consumer prices.

Given the benefits that would accrue were limited and uncertain, and the costs have been inefficient and flow through to consumers in the form of increased prices, the Commission determined that the rule change requests would not, or would not be likely to, contribute to the achievement of the National Electricity Objective.

Background

The AEMC received two related rule change requests, from Snowy Hydro and ENGIE, which sought to amend the NER to require:

• loads above 30MW that are or intend to be price responsive; and,
• non-scheduled non-intermittent generating units above 5 MW nameplate rating

to participate in the central dispatch process. 

ENGIE also proposed two additional proposals, which may have operated in tandem or as alternatives to the proposed threshold reduction. These included creating a new 'soft scheduled' participant category and/or requiring changes to Australian Energy Market Operator (AEMO's) pre-dispatch and dispatch processes to take into account price responsiveness of non-scheduled generators and non-scheduled loads.

The AEMC consolidated the separate rule change proposals and commenced consultation on the combined rule change proposal on 21 April 2016.

An industry workshop to share the results of the AEMC analysis and to seek feedback from stakeholders was held on 24 March 2017.

The Commission issued a draft determination to make no rule change on 20 June 2017.

For any inquiries in relation to this rule change decision, please contact Michael Bradley on michael.bradley@aemc.gov.au or (02) 8296 7868.