On 19 November 2020 the AEMC has made a final rule that amends the National Electricity Rules (NER) to improve the transparency of the unserved energy calculation and the clarity of the framework that underpins the calculation. 

The final rule

The final rule makes amendments to clauses 3.9.3C and 3.9.3D of the NER. 
The final rule:

• Requires the Australian Energy Market Operator (AEMO) to set out, through the Reliability Standard Implementation Guideline, the method for calculating unserved energy, including how the amount of energy demanded in the relevant region is determined.
• Includes a purpose statement or principle for the definition of unserved energy, to assist stakeholders and AEMO with the definition's interpretation. 
• Makes minor drafting changes to clause 3.9.3C(b)(1) and clause3.9.3C(b)(2) to make it clearer that the intent of the clauses is to include unserved energy that results from power system reliability incidents, and exclude unserved energy that results from power system security incidents. 
• Deletes protected events from clause 3.9.3C(b)(2)(i) of the NER, as it is already captured by non-credible contingency events, clarifying that multiple 'contingency events' are in fact multiple 'credible contingency events', and clarifying that 'non-credible contingency events' include both single and multiple non-credible contingency events. 

The final rule: 

• Will make the inputs into and method for calculating unserved energy more transparent, equipping market participants with more information to support improved decision-making.
• Will provide improved clarity as to how to interpret the unserved energy definition and what events are or are not included in the backward-looking unserved energy metric, therefore enhancing the integrity of the reliability standard and promoting signals for efficient investment in generation and demand response infrastructure. 
• Can be implemented at minimal cost by AEMO. 

Consultation process

On 24 September 2020 the AEMC published a consultation paper. We received seven submissions, which can be found below and which have been considered in the final determination.

The Commission adopted an expedited process in considering this rule change request as it considered that the proposed rules were unlikely to have a significant impact on the national electricity market, gas market, or the regulation of pipeline services. No objections to using this process were received.

Background

On 1 August 2019, The Reliability Panel published its final report of the Review of the Definition of Unserved Energy.

The Panel concluded that the definition of unserved energy for the purposes of the reliability standard is largely fit for purpose for the existing national electricity market environment. 

However, the Panel identified areas where there was room for improvement with respect to information provision, clarity and transparency around how unserved energy is calculated.

One of the outcomes of the review was this rule change request, which was submitted to the AEMC on the same date of the publication of the final report of the review.

The initiation of this rule change request was delayed as part of the joint market body prioritisation framework submitted to the Commonwealth Minister for Energy and Emissions Reduction in April 2020 in order to ease regulatory pressure on the energy sector during the COVID-19 crisis.