This Rule changes the method used by NEMMCO for the financial settlement of regional price differences in the market for generated electricity. NEMMCO asked for a new Rule allowing the recovery of outstanding negative inter-regional settlements residue from future settlement residue auction proceeds rather than from auction fees (which can delay adjustments by a number of years).  it limits the application of the new recovery regime to three years.  The Commission observes that the reasons for persistent negative settlement residues need to be addressed and referred this concern to its Congestion Management Review

Background

On 8 February 2005, NEMMCO submitted to NECA a proposal to amend the National Electricity Code (the Code) to modify the way in which it recovered negative settlements residue. NECA conducted a first round consultation on this proposal - submissions closed on 21 March 2005.

On 1 July 2005, the Commission acquired responsibility for the proposal under the National Electricity Law (NEL) transitional provisions.

On 19 January 2006, the Commission gave notice under section 99 of the NEL of its draft Rule determination. In making the draft Rule determination, the Commission took into account the consultation conducted by NECA under the Code.

The Commission made a final Rule determination and made the National Electricity Amendment (Negative Inter-Regional Settlements Residue) Rule 2006 No. 4.

The provisions of the above Rule, including the Savings and Transitional provisions, commenced on 1 July 2006.