Consultation on the Draft National Electricity Amendment (Interim Reliability Measure) Rule 2020

The Energy Security Board (ESB) published the consultation paper on the Interim Reliability Measure Draft Rule - Reliability Reserve on 11 May 2020.

This consultation package includes a consultation paper and accompanying Draft National Electricity Amendment (Interim Reliability Measure) Rule 2020 (Draft Rule).

The Draft Rule is intended to:

• reduce the risk of load shedding across the NEM by helping to keep unserved energy in each region to no more than 0.0006%

• replace the need for the Victorian Jurisdictional derogation for multi-year contracting of RERT (which commenced in April 2020)

• temporarily replace long notice RERT until March 2025.

The Draft Rule and consultation paper provide detailed information about how the interim reliability reserve would operate, including the circumstances where AEMO would be able to enter into multi-year contracts under the mechanism.

The Draft Rule places limitations on AEMO entering into multi-year contracts compared to the requirements which apply under the Victorian Jurisdictional Derogation (this is because the trigger being an exceedance of 0.0006% of USE in a region allows for the procurement a greater volumes of reserves compared with the current trigger for RERT which is an exceedance of 0.002% in a region). The proposed requirements for entering into contracts of up to 3 years include:

• an exceedance of the 0.0006% has been forecast for 2 out of the 3 years

• the multi-year contract is more cost effective than entering into shorter duration contracts covering the same period

• the volume procured is no more than AEMO considers is reasonably necessary to ensure the reliability of supply in the region and is limited to what is required for meeting the largest exceedance of the 0.0006% occurring during the contract’s term.

Importantly the Draft Rule applies the RERT principles and the current out-of-market rules that apply under the current RERT framework, in order to minimise impacts on customer bills and market distortions. It also applies the comprehensive reporting requirements from the Victorian Jurisdictional Derogation to ensure there is an appropriate level of transparency over AEMO’s decisions to enter into reserves under the Interim Reliability Reserve.

The ESB have also released the analysis provided by ACIL Allen and Ernst and Young that supported its advice to the COAG Energy Council in March 2020.

This consultation is now closed. Please find submissions in response, below.