The Australian Energy Regulator (AER) has completed its review and consultation of the reliability instrument request from the Australian Energy Market Operator (AEMO) for New South Wales in 2024. Following the review and consideration of submissions, the AER has decided to make the T-3 reliability instrument, triggering the Retailer Reliability Obligation (RRO).
The reliability instrument request from AEMO was reviewed in accordance with the decision making criteria set out in the National Electricity Rules. The criteria requires the AER to consider if AEMO’s reliability forecast contains any material errors in either calculation or input data, or inaccurate assumptions that materially impact the forecast reliability gap. The AER must also consider if AEMO has used reasonable endeavours to prepare the reliability forecast in accordance with the AER’s Forecasting Best Practice Guidelines. As no material errors or inaccurate assumptions were identified, and AEMO’s endeavours with respect to the forecasting best practice guideline were considered reasonable, the AER has decided it is appropriate in the circumstances to make the reliability instrument.
The details of the New South Wales reliability instrument are:
- Weekdays from 1 January to 29 February 2024, for the trading periods between 3 PM and 8 PM AEST.
Triggering the RRO then signals that liable entities in New South Wales should make prudent contracting decisions, taking in to account the potential risk identified in the reliability forecast and reliability instrument to purchase appropriate levels of electricity market contracts to cover their share of customer demand. To support liable entities, the Market Liquidity Obligation (MLO) generators in New South Wales - currently AGL, Origin and Snowy Hydro - are required to offer MLO contract products on the ASX to add liquidity and ensure there are contracts available.
The RRO is designed to support reliability in the National Electricity Market (NEM). In particular it encourages retailers, and some large energy users, to establish contracts for their share of demand for a prescribed period.
If AEMO identifies a reliability gap in a region of the NEM as part of its Electricity Statement of Opportunities it must provide the AER with a reliability instrument request. The AER's role in deciding whether to make a reliability instrument is to have regard to the decision making criteria and not to re-create AEMO's reliability forecast, nor is it to duplicate the methodology or modelling used in the reliability forecast. The AER can only make a reliability instrument as requested by AEMO, it is not open to the AER to make changes to the instrument.