NECA: Investigation into the events of Thursday 30 January 2003

We announced last month an investigation into the events of Thursday 30 January when New South Wales set a new record demand of almost 12,350MW. This, and significant network constraints, at times led to low reserves. The spot price peaked at $5,114/MWh. The average for the day was $507/MWh. Network constraints also led to significant amounts of generation across the entire national market being despatched out of merit order.

The report of our investigation is available to download. It makes clear that the reliability of the system was compromised on 30 January. Some price outcomes were perverse. Those outcomes raise concerns about the operation of the market.

Our report concludes that those events underline the importance of achieving more efficient and commercial pricing and despatch; and of improving transparency, predictability and accountability in formulating and implementing constraints. NECA and NEMMCO jointly have work in hand to achieve both those objectives. In addition, as a result of the events of 30 January, we recommend that NEMMCO should more accurately reflect actual transmission capabilities in its medium and short-term projected assessments of system adequacy (PASA), and in predespatch. NEMMCO should also initiate further work to allow it accurately to incorporate the effects of intra-regional constraints in PASA and predespatch, and to improve the accuracy of its demand forecasts.