AER incentive scheme to reduce electricity transmission congestion

The Australian Energy Regulator today issued a proposed scheme which is designed to improve service standard incentives for electricity transmission companies.

"Data collected by the AER shows that transmission outages account for around half of total congestion costs," AER Chairman, Mr Steve Edwell, said.

"Outages can force low cost generation to be switched off, and more expensive generation to be switched on. This increases prices for electricity in the spot market. At times the impact is very high.

"The AER proposes to introduce a new service standards incentive which rewards transmission companies for reducing the number and duration of outages that have a significant market impact.

"The scheme will provide transmission companies with improved incentives to time outages in off-peak periods, conduct live line work and better co-ordinate outages.

"The AER has undertaken considerable work in the lead up to developing this scheme. The AER has reported into measures of the market impact of congestion for the past four years. The report for 2006/07 is being issued in conjunction with the proposed incentive scheme. The AER also established a working group comprising representatives from industry and end users. The working group has made a valuable contribution to the project.

"The AER will consult with all stakeholders in developing the incentive scheme and will consider submissions received on the proposed scheme before issuing a final determination in the first quarter next year.

"The aim is to finalise an incentive regime ahead of the upcoming revenue reset for the New South Wales transmission company, TransGrid," Mr Edwell said.

The proposed scheme and the report into the market impact of congestion for 2006/07 will be available on the AER website.

Issued date: 
20 November 2007
AER reference: 
NR 018/07
Steve Edwell, AER Chairman 03 9290 1421 0423 047 554
Lin Enright, Media 02 6243 1108 0414 613 520
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