Final AEMC Determination Welcomed

The Australian Energy Council (AEC) welcomes the Australian Energy Market Commission’s (AEMC’s) Final Determination on a National Electricity Rule change to enhance the Reliability and Emergency Reserve Trader (RERT) mechanism.

The AEC’s General Manager Policy, Ben Skinner, said that the decision sought to balance the need to have sufficient reserves in place when needed, whilst minimising costs to energy users.

The RERT allows the Australian Energy Market Operator (AEMO) to access additional electricity reserves, typically demand-side response and emergency diesel generators, to use as a last resort in regions at times of very high demand or limited supply.

Mr Skinner said the vast majority of generation to meet demand is provided by generators operating within the market. The RERT is a form of “top up” used when the market is assessed to be outside the reliability standard.

“This occurred in the last two summers in Victoria and South Australia, following the closure of coal plants, but fortunately, current forecasts suggest that the standard can be met from the market alone for the next few summers,” he said.

“The RERT reduces, but can’t remove, the risk of customer interruptions due to insufficient generation to meet peak demand.  For example, the RERT was active this last summer but unfortunately some customers were nevertheless interrupted.

“The RERT also does not address the 96 per cent of supply interruptions caused by local network outages”

“The AEMC considered a proposal to significantly alter the scope of the RERT, which could potentially have raised costs for customers. However after consulting widely and considering the many complex matters, it has concluded in favour of a rule that is superior to both the proposal and the existing RERT.

“While the AEMC did not agree with the AEC’s preference in its submission to retain a maximum nine month contracting period, we recognise the AEMC listened to our views,” Mr Skinner said.

About the Australian Energy Council

The Council represents 23 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.