Final determination abolished the Snowy region Rule (Snowy region to be abolished 1 July 08 under the National Electricity Rules).

Background

On 11 November 2005, the Commission received a Rule proposal from Snowy Hydro Limited regarding a review of the Snowy regional boundary.

On 22 December 2005, the Commission received a revised draft Rule from Snowy Hydro Limited. This revised draft Rule replaces the draft Rule contained in Snowy Hydro’s original proposal of 11 November 2005.

On 12 January 2006, the Commission published a notice under section 95 of the National Electricity Law (NEL) commencing initial consultation on the Snowy Region Boundary Rule proposal from Snowy Hydro Limited.

On 6 February 2006, the Commission received a related Rule proposal from Macquarie Generation which also considered the Snowy regional boundary. This proposed an alternative Snowy Region boundary to that proposed by Snowy Hydro. This Rule change proposal was later withdrawn and replaced with an alternate proposal by Macquarie Generation which would split the Snowy Region into two.

The Commission published a notice under section 107 of the NEL on 16 February 2006, extending initial consultation on the Snowy Region Boundary Rule proposal from Snowy Hydro Limited until 24 March 2006. This enabled the co-ordination of submissions on both the Snowy Hydro Limited and Macquarie Generation Alternative Snowy Region Boundary Rule change proposals.

On 18 May 2006, the Commission issued a notice under Section 107 of the NEL extending the period for publication of the draft Rule determination on the Snowy Hydro proposal to change the Snowy regional boundary to 11 August 2006. This timeframe was extended to allow the Commission adequate time to carry out the modelling and analysis necessary to make its draft determination.

The Commission concurrently considered five Rule change proposals and one reference for Review that relate to various aspects of network congestion management. It was essential that for this work to be co-ordinated by the Commission in order to deliver a comprehensive “Congestion Management Regime” for the market going forward. The Commission’s Congestion Management Program Statement of Approach December 2006 (PDF) provided information and clarity about the way in which the Commission would address the five congestion related Rule change proposals and the Congestion Management Review in an integrated manner.

Other Rule change proposals that relate to congestion management and region boundaries and the Review can be found at:

• Southern Generators/NEMMCO proposal on Management of negative settlement residues in the Snowy Region
• Ministerial Council for Energy proposal on Region Boundaries
• Snowy Hydro Ltd proposal on Management of negative settlement residues by re-orientation
• Congestion Management Review
• Macquarie Generation proposal on Alternative Snowy Region Boundary

On 16 June 2006 the Commission released an Information Disclosure Statement (PDF), which sets out the analytical framework, modelling methodology, and assumptions that the Commission proposed to use in quantitative modelling of the Snowy Hydro Rule change proposal on the Snowy regional boundary. This modelling analysis will be undertaken and the results of the modelling exercise were included in the Commission’s draft determination.

Interested stakeholders were invited to make comment on the data inputs, time horizon, and plant expansion methodology outlined in the Statement. Submissions were due by 5 pm on 23 June 2006.

This public consultation process on modelling inputs replaced the Technical Reference Group, formed by the Commission to comment on modelling inputs for the draft Rule determination (PDF) on National Electricity Amendment (Management of negative settlement residues in the Snowy Region) Rule 2006. The Commission’s 16 June 2006 response (PDF) to a Letter from Delta Electricity (PDF) , agreed to a more transparent public consultation process on the inputs to the Commission’s quantitative modelling.

On 10 August 2006, the Commission issued a notice under section 107 of the NEL extending the period for the making of the draft Rule determination on the Snowy Hydro proposal to 15 December 2006. This revised timeframe aligns the Commission’s consideration of this Rule change proposal and the Macquarie Generation Alternative Snowy Region Boundary proposal with the other components of the Congestion Management Program, as described in the Commission’s Statement of Approach, released 6 June 2006. The Commission was of the view that the difficulty in aligning the processes in order to co-ordinate the consideration of these proposals meant it was in the public interest to extend the periods for the making of the draft determinations to enable the Commission to deliver a comprehensive “Congestion Management Regime”.

In response to a request from the Commission, NEMMCO has provided the Commission with its perspective on the steps and timeframes to expeditiously implement a region boundary change in the Snowy region. The Commission sought comment from interested parties on what steps they would need to take to adjust to a new regional boundary structure and the timeframes required to implement these changes. Submissions were due by Friday 13 October 2006. The Commission considered these submissions in relation to its assessment of the Snowy Hydro proposal.

On 28 November 2006, the Commission released an Information Disclosure Statement confirming that it would not be publishing a draft Rule determination on the Snowy Region Boundary on or before 15 December 2006. This Statement was in response to a inquiry from NEMMCO regarding a potential clash in the timing of its Settlement Residue Auction on 15 December 2006 and the current publication date of the draft Rule determination on the above Rule change proposal.

On 14 December 2006, the Commission published a notice under section 107 of the NEL extending the period of publication for the draft Rule determinations on the Snowy Hydro proposal to change the Snowy regional boundary. The timeframe was extended from 15 December 2006 to 25 January 2007.

The Commission decided to release separate draft Rule determinations on the Snowy Hydro and Macquarie Generation proposals because the Commission’s analysis of the Snowy Hydro proposal was well advanced and could be ready for decision earlier than the more analytically complex Macquarie Generation proposal. The Commission considered it would be beneficial to undertake early consultation on the Snowy Hydro matter, pending release of the Macquarie Generation draft decision.

On 19 January 2007, the Commission published its draft Rule determination and Draft Rule on the Snowy Hydro proposal. The draft Rule determination proposed to implement the Snowy Hydro proposal to abolish the Snowy region.

On 25 January 2007, the Commission gave notice under section 99 of the NEL to commence formal consultation on the draft Rule determination and draft Rule. Submissions on the draft Rule determination and draft Rule were due by 9 March 2007. Any requests for a pre-determination hearing were due by 2 February 2007.

On 30 January 2007, the Commission announced its decision to hold a public Consultation Forum on its draft Rule determination and draft Rule on the Abolition of Snowy Region. A formal notice informing participants of the Consultation Forum was published on 1 February 2007.

On 2 February 2007, the Commission received a request from the Southern Generators for a pre-determination hearing on the draft Rule determination and draft Rule on the Abolition of Snowy Region.

The Commission considered the request and decided not to hold a hearing under the provisions of section 101 of the NEL. The reason for this decision was that the Commission had already decided on and announced the holding of a Consultation Forum on 22 February 2007. The Commission considered that this Consultation Forum would provided the same stakeholder participation opportunities as a pre-determination hearing, and therefore, an additional hearing was not necessary. 

At the Forum, the Commission discussed its reasoning for the decision and elaborated on modelling results. Parties had the opportunity to make comments and ask questions in relation to the draft Rule determination and draft Rule. The Forum was held at the Hilton Melbourne International Airport Hotel on 22 February 2007, between 9.30 am and 1.30 pm. The Commission made available the constraint sets and loss factors that it used to model the Snowy Hydro proposal and Split Region Option. The Commission has also published the two consultancy papers on the Snowy Hydro proposal, prepared for the Commission by Darryl Biggar. The papers were referenced in the Commission's draft Rule determination on the Abolition of Snowy Region.

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". The Commission later received a formal Rule change request to address this.

On 5 March 2007, the Commission received a letter from NEMMCO updating the advice it had provided the Commission on the time required to implement a region boundary change involving the Snowy region. In light of further analysis, NEMMCO has revised its estimate of a feasible implementation date from 1 November 2007 to 1 July 2008. Reasons for the revised timeframe are set out in the letter, and will be elaborated further in NEMMCO’s submission to the Abolition of Snowy Region draft Rule determination.

On 5 March 2007, the Commission also received a Rule change proposal from Macquarie Generation, which seeks to amend the existing Snowy region boundary by splitting the region in two.

On 8 March 2007, the Commission published a notice under s.107 of the NEL extending consultation on the draft Rule determination and draft Rule on the Abolition of Snowy Region proposal. The time period for submissions has been extended from 9 March 2007 to 30 April 2007. This extension was in the long term interests of consumers because it will provide stakeholders: additional time to consider the complex and technical content contained in the draft Rule determination and draft Rule; and the opportunity to consider all the alternatives before the Commission, including the new Macquarie Generation proposal related to the Snowy Region. Consultation under section 95 of the NEL on this new Macquarie Generation proposal commenced on 8 March 2007.

On 28 March 2007, the Commission released its updated schedule for its work on congestion management. The updated schedule will provide 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 26 April 2007, the Commission published its letter to NEMMCO in response to NEMMCO’s 5 March 2007 letter on feasible dates for implementation of a region boundary change. In its letter, the Commission notes that in light of NEMMCO’s letter of 5 March 2007, and the Commission’s 28 March 2007 updated schedule for its work on congestion management, NEMMCO would be unable to implement a change to the Snowy region boundary by 4 November 2007, as proposed in the draft Rule for the Abolition of Snowy Region Rule change proposal.

On 10 May 2007, the Commission published a notice under section 107 of the NEL extending the period for publication of the final Rule determination on the Abolition of Snowy Region Rule change proposal to 30 August 2007. As conveyed in its Congestion Management Work Program Update March 2007 (PDF), the Commission considers this extension is in the best interests of consumers as it will provide 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 6 July 2007, the Commission received a joint supplementary second round submission from Snowy Hydro and NEMMCO regarding the region location of Guthega Power Station and Jindabyne Pumps under the Abolition Rule change proposal.

On 30 August 2007, the Commission gave notice under section 102 of the NEL of the publication of both the final Rule determination and the National Electricity Amendment (Abolition of Snowy Region) Rule 2007 No.7 for the Abolition of Snowy Region proposal. The Commission also gave notice under section 103 of the NEL of the making of that Rule. The Rule commenced on 30 August 2007 and determined to abolish the Snowy Region. The Commission determined that, when compared to the alternatives of both the Split Snowy Region proposal and the Southern Generators' Congestion Pricing proposal, the Abolition of Snowy Region Rule promotes the achievement of the NEM Objective and better satisfies the Rule making test. The reasons for the Commission's decision are set out in its final 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 abolition of the Snowy region occurred on 1 July 2008 under the Rules.