On 8 November 2007, the Commission gave notice under sections 93 and 102 of the NEL of the making of a single Rule determination for this proposal and the Southern Generators’ Congestion Pricing proposal. The Commission confirmed its draft decision that the proposal did not more effectively promote improvements in competition and efficiency in the NEM, and therefore the long term interests of electricity consumers, when compared to the Abolition of Snowy region alternative.

Background

On 5 March 2007, the Commission received a Rule change proposal from Macquarie Generation, which sought to amend the existing Snowy region boundary by splitting the region in two. The proposal did not seek to change any other region boundaries.

An earlier Macquarie Generation Rule change proposal in relation to the Snowy region was submitted on 6 February 2006. That proposal sought to replace the existing Snowy region with two new NEM regions, one in Northern Victoria and the other in South-West New South Wales. On 21 February 2007, Macquarie Generation wrote to the Commission requesting that its existing Rule change proposal be modified to reflect this new “Split Region Option”.

Macquarie Generation stated that the Split Snowy Region, a region boundary option considered as a counterfactual in the Commission’s draft Rule determination on the Abolition of Snowy Region Rule change proposal, largely captured the benefits of its 3 February 2006 proposal. View more information on Snowy Hydro’s Abolition of Snowy Region Rule change proposal.

In this Split Snowy Region proposal, Macquarie Generation requested that the Commission “discontinue the process” for considering the Northern Victoria/South-West NSW proposal of 3 February 2006.

On 8 March 2007, the Commission published a notice under section 95 of the NEL commencing first round consultation on the Split Snowy Region Rule change proposal from Macquarie Generation. The notice reflects the Commission’s decision to commence the Rule change process under section 94 of the NEL for this proposal. Interested parties were invited to provide submissions on the Rule change proposal by 30 April 2007. The close of submissions on this proposal were aligned with the close of second round submissions on the Abolition of Snowy Region proposal.

On 28 March 2007, the Commission released its updated schedule (PDF) for its work on congestion management. The updated schedule provided interested parties with an opportunity to consider the interrelated issues associated with the Congestion Management Review, the MCE regional boundaries Rule change proposal and the various Rule change proposals in relation to the Snowy region boundary in an integrated manner.

On 10 May 2007, the Commission published a notice under section 107 of the NEL extending the period for publication of the draft Rule determination on the Split Snowy Region Rule change proposal to 30 August 2007. As conveyed in its March 2007 Updated Schedule, the Commission considered this extension was in the best interests of consumers as it provided interested parties with an opportunity to consider the interrelated issues associated with the Congestion Management Review, the MCE regional boundaries Rule change proposal and the various Rule change proposals in relation to the Snowy region boundary in an integrated manner.

On 30 August 2007, the Commission gave notice under sections 93 and 99 of the NEL of the making of a single draft Rule determination for this proposal and the Southern Generators’ Congestion Pricing proposal. The Commission was not satisfied that when compared to the Abolition of Snowy region proposal this proposal from Macquarie Generation would more effectively promote improvements in competition and efficiency in the NEM, and therefore more effectively promote the long term interests of electricity consumers. The reasons for the Commission’s decision not to accept the proposed Rule are presented in its draft Rule determination. The Commission also commissioned Professor Richard Green to undertake a due diligence review of the quantitative modelling used to inform the Commission’s decision.

The Commission did not receive any requests for a hearing on the draft Rule determination before Thursday, 6 September 2007. Submissions on the draft Rule determination closed on Tuesday, 16 October 2007.