AER invites submissions on proposal to delay final RRO Guidelines

In March 2020 the COAG Energy Council agreed to amend the Retailer Reliability Obligation (RRO) framework. The amendments include:

  • the trigger will be based on a 0.0006 per cent unserved energy level, and
  • the T-1 instrument will no longer require a T-3 trigger to first be made. The Energy Security Board (ESB) is expected to provide a draft legislative and rules package for amendments to the RRO to the Energy Council in September 2020.

The Australian Energy Regulator (AER) is required to develop a number of guidelines to support the operation of the RRO. Four of these guidelines—the Final Reliability Instrument Guidelines, Final Market Liquidity Obligation (MLO) Guidelines, Final Contracts & Firmness Guidelines and new AER Reliability Compliance Procedures & Guidelines—are currently scheduled for consultation and release by the end of 2020.

The AER proposes to delay its consultation on, and development of, these four guidelines until after the ESB has submitted its recommended amendment package to the COAG Energy Council in September 2020. This delay would allow the AER and stakeholders to take the amendments to the Law and Rules into account in our consultation on and development of the final guidelines.  Final guidelines would then be released by 30 June 2021.

The effect of this delay would be that the final Reliability Instrument Guidelines, MLO Guidelines and Contracts & Firmness Guidelines would take effect from 1 July 2021, in time for the first application of the new Law and Rules. In the intervening period, the interim versions of those guidelines released by the AER in 2019 would remain in place.

The Reliability Compliance Procedures and Guidelines, which will support the introduction of a number of tools we can use to monitor and investigate compliance by regulated entities with the RRO, have not been released in interim form. The effect of this delay would be that the AER’s introduction of new, RRO compliance monitoring mechanisms (for example, compliance audits), would be deferred for six months to 1 July 2021.

This proposal would not impact the finalisation of current consultations on the Forecasting Best Practice Guideline or the Opt-in Guideline, development of which will continue as planned.

Invitation for submissions

Submissions on our proposal to delay consultation on the above guidelines are welcome. Submissions should be sent via email to: RRO@aer.gov.au, by close of business on 22 May 2020.

Background

The RRO will ensure energy retailers are accountable for reliability in a way they haven’t been before.  If the RRO is triggered, it will require retailers to enter into sufficient contracts to meet their share of expected system peak demand. This will provide an incentive for market participants to invest in the right technologies in regions where it is needed, to support reliability in the National Electricity Market.

The Australian Energy Market Operator (AEMO) will identify any potential reliability gaps in each National Energy Market region in the coming five years using its Electricity Statement of Opportunities. Under the current framework, if AEMO identifies a material gap three years and three months out, it will apply to the AER to trigger the RRO. The South Australian Minister also has the ability to trigger the RRO within South Australia.

In 2019 the AER consulted on a set of interim guidelines to support the implementation of the RRO. Final guidelines were initially scheduled for consultation and development in 2020.

Sector: 
Segment: 
Issued date: 
7 May 2020
AER reference: 
AC 53/20