NECA: Changes to bidding and rebidding rules - January 2003

The ACCC late last year authorised changes to the bidding and rebidding rules following proposals put forward by NECA that will, amongst other things, create an obligation for market participants’ bids and offers to represent their genuine intentions at the time they are made. This obligation will be linked to a practicable enforcement mechanism that will allow participants’ intent to be inferred from their conduct or from other relevant circumstances. We will gazette the changes shortly to take effect from 1 February.

Rebidding, subject to appropriate safeguards, is essential to the efficient operation of the market. The ‘good faith’ obligation represents no more nor less than fair and honest dealing. Especially when combined with the enforcement mechanism, that was not part of the Commission’s original draft determination, it constitutes a worthwhile strengthening of those essential safeguards. We have no plans to seek further changes to the rules governing bidding and rebidding.

A note setting out NECA’s views on the intent and effect of the rule changes is available to download. The note has also been sent to the chief executives of all market generators. Whilst the note is intended to be helpful, interpretation of the market rules is ultimately solely the responsibility of the National Electricity Tribunal. The note makes clear, however, that we have no intention to seek to enforce the ‘good faith’ obligation in a way that would prevent generators from acting and reacting commercially in the light of material changes to contract as well as physical market conditions.

The broader package of changes authorised by the ACCC also incorporates new provisions aimed at improving the efficiency of spot market outcomes by allowing smarter use of total, including ancillary services, resources. The Reliability Panel will shortly be initiating the necessary consultation to allow those broader changes to be fully implemented. As we are required to do, we shall also shortly be launching a wider-ranging review of the effectiveness of the new ancillary services markets.