The Australian Energy Market Commission (AEMC) is asking stakeholders for feedback on a rule change request from the Australian Energy Market Operator (AEMO) that seeks broad changes to the Reliability and Emergency Reserve Trader (RERT) framework.
The RERT is one of the tools available to AEMO to help avoid blackouts.
When power shortages are projected, AEMO can use the RERT – a type of strategic reserve – by paying a premium for additional generation or demand response to be on stand-by.
Mechanisms that allow the operator to contract for out-of-market reserves to act as a safety net, has been a feature of the national electricity market (NEM) since its commencement.
“Strategic reserves remain an important feature of the framework as one of the last resort alternatives to involuntary load shedding,” AEMC said in a statement.
“AEMO considers changes to the RERT framework will help manage the risk of shortfalls in light of greater uncertainty and a tightening supply-demand balance.”
AEMO has proposed changes to how the RERT is triggered and how far in advance of a projected shortfall AEMO can enter into RERT contracts.
It has also proposed the introduction of standardised RERT products to make offers easier to compare, reduce complexity and provide certainty and clarity.
The current RERT framework, with the procurement trigger being based on the reliability standard or power system security, has been designed to balance the benefits to consumers of having reliable electricity supply against the costs associated with increasing the levels of reliability in the NEM.
“The appropriateness of the reliability standard and these trade-offs will be considered through this rule change,” AEMC said.
“If the trade-offs are not effectively balanced then consumers will end up paying more.
“Stakeholders are encouraged to provide views on these trade-offs and to comment on broader aspects of the RERT framework.”
Submissions on the consultation paper are due by July 26.