Performance Standard Compliance of Generators

Rule Change: Completed

Overview

On 23 October 2008, the Commission published a notice under sections 102 and 103 of the National Electricity Law (NEL) of the making of the National Electricity Amendment (Performance Standard Compliance of Generators) Rule 2008 and associated Rule determination. The Rule commenced operation on 23 October 2008.

Background

On 14 February 2008, the NGF lodged a Rule change proposal regarding the compliance with performance standards by Generators.

The proposal is primarily in response to the Final Report of the AEMC Review of Enforcement of and Compliance with Technical Standards (dated 1 September 2006).

The NGF’s Rule change proposal sought to:

allow registered performance standards to be adjusted where all relevant parties agree that the standard is incorrect;
require a Generator to have (and modify as necessary) a compliance program that is based on defined guidelines issued by the Reliability Panel and the guidelines should be updated using experience gained during significant power system events;
clarify that the requirement to adopt and implement compliance programs and other obligations under rule 4.15 is exclusively related to the operation of registered performance standards (and not the operation of that plant more generally, which is dealt with elsewhere in the Rules);
clarify that NEMMCO must advise the AER of any non-conformance with performance standards; and
allow participants to seek review from the AER regarding the time allowed by NEMMCO for any such non-conformance to be rectified.

The NGF also requested that this Rule change proposal be “fast tracked” under section 96A of the NEL.

On 6 March 2008, the Commission published a notice under section 95 of the NEL advising of its intention to commence the Rule change process and initial consultation on this Rule change proposal.

The Commission did not accept the NGF’s request that this Rule change proposal be “fast tracked” as the Commission considered that all elements of the proposal did not sufficiently satisfy the conditions under section 96A of the NEL. In particular:

with respect to references in the proposal to recommendations in the Final Report of the AEMC Review of Enforcement of and Compliance with Technical Standards (1 September 2006), the proposal offered different solutions to those recommendations; and
the proposal identified some additional problems to the recommendations and suggested proposed solutions.

Submissions for initial consultation on the Rule change proposal closed on 4 April 2008.

On 12 June 2008, the Commission published a notice under section 107 of the NEL to extend the publication of the draft Rule determination and draft Rule for the NGF Rule change proposal by two weeks. The Commission considered it necessary to extend the publication of the draft Rule determination in order to seek legal advice on a number of issues that have been raised in stakeholder submissions.

On 26 June 2008, the Commission gave notice under section 99 of the NEL of the making of the draft Rule determination and draft Rule on the Rule change proposal.

In its draft Rule determination, the Commission agreed with some of the NGF’s proposed Rule changes in part and proposed other Rule changes to address stakeholder issues, and reached the following conclusions:

the Reliability Panel will develop the template for generator compliance programs based on a rigorous consultation process and review this template within a defined time period in accordance with clause 8.8.3 of the Rules every three years;
the AER will be responsible for accepting or rejecting compliance programs;
Registered Participants can seek a review from the AER regarding the time allowed by NEMMCO for participants to rectify breaches of performance standards and the AER will determine an appropriate timeframe in the event of a dispute;
NEMMCO must advise the AER of any breach with performance standards, including when NEMMCO reasonably believes the Registered Participant may have breached performance standards but NEMMCO has not been notified;
registered performance standards will be adjusted where all relevant parties (i.e. NEMMCO, the relevant participant and the relevant network service provider (NSP)) agree;
rule 4.15 is exclusively related to the operation of registered performance standards (and not the operation of that plant in general);
the terms “non-compliance” and “breach” (and any other like terms) under rule 4.15 are retained; and
NSPs will be involved in the development and approval of the template for generator compliance programs, and NSPs will be able to access information on generator performance.

In accordance with section 101 of the NEL, any interested person or body may request that the AEMC hold a hearing in relation to the draft Rule and draft Rule determination. There were no requests for a hearing which closed on 3 July 2008.

Submissions on the draft Rule determination and draft Rule closed on 8 August 2008.

On 18 September 2008, the Commission published a notice under section 107 of the NEL to extend the period for making its final Rule determination and final Rule for the NGF Rule change proposal to 23 October 2008.

The Commission considered that a specific issue raised by the request for the Rule change was of sufficient complexity to warrant this extension in the time period.

The specific issue was whether it would be appropriate for the final Rule to incorporate a role and process for the Australian Energy Regulator to be responsible for accepting or rejecting generators’ compliance programs on performance standards (based on the Reliability Panel template for generator compliance programs). This role was proposed in the Commission’s draft Rule determination on this Rule change proposal. The proposed role and process could have been incorporated by means of an amendment to rule 4.15 in the Draft National Electricity Amendment (Performance Standards Compliance of Generators) Rule 2008 published by the Commission on 26 June 2008. Further details can be found below in the Commission’s explanatory note on its request for submission on this issue, which included draft amendments to the Commission’s draft Rule to implement the policy proposal.

Submissions on this specific issue closed on 3 October 2008.

The key elements of the Rule determination are:

the Reliability Panel will develop the template for generator compliance programs based on a public consultation process and review this template within a defined time period in accordance with clause 8.8.3 of the Rules every three years or as the Commission directs;
Registered Participants will institute and maintain generator compliance programs;
the AER will regularly conduct spot audits of selected generators’ compliance programs as part of its compliance monitoring activities;
Generators will engage with external auditors to independently audit their compliance programs to determine whether they are required to amend their compliance programs and amend if required;
Registered Participants can seek a review from the AER regarding the time allowed by NEMMCO for participants to rectify breaches of performance standards and the AER will determine an appropriate timeframe in the event of a dispute;
NEMMCO must advise the AER of any breach with performance standards, including when NEMMCO reasonably believes the Registered Participant may have breached performance standards but NEMMCO has not been notified;
registered performance standards will be adjusted where all relevant parties (i.e. NEMMCO, the relevant participant and the relevant NSP) agree;
rule 4.15 is exclusively related to the operation of registered performance standards (and not the operation of that plant in general);
the terms “non-compliance” and “breach” (and any other like terms) under rule 4.15 are retained;
as part of the public consultation process under clause 8.8.3, NSPs will be involved in the development of the template for generator compliance programs; and
NSPs will be able to access information on generator performance.