The Retailer Reliability Obligation (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 the Australian Energy Market Operator (AEMO) identifies a reliability gap in a region of the NEM as part of its Electricity Statement of Opportunities (ESOO) it must provide the Australian Energy Regulator (AER) with a reliability instrument request.
T-3 Reliability Instrument
The AER has made a T-3 Reliability Instrument for New South Wales from 1 January to 29 February 2024 inclusive.
Our review of AEMO's reliability instrument request found no material errors in AEMO's calculations or input data. The assumptions that underpin AEMO's forecast data and their impact on unserved energy were not considered inaccurate and we consider that AEMO has used reasonable endeavours to prepare the reliability forecast in accordance with the interim Forecast Best Practice Guidelines.
The T-3 Reliability instrument applies to the New South Wales region of the NEM for the trading intervals between 3 pm and 8 pm Eastern Standard Time, each weekday during the period 1 January to 29 February 2024 inclusive. AEMO's one-in-two year peak demand forecast for the forecast reliability gap period is 13,710 MW (reported on a 50% Probability of Exceedance, ‘as generated’ basis).
Market Liquidity Obligation
The Market Liquidity Obligation (MLO) is a market making requirement designed to facilitate transparency and liquidity in the trading of electricity futures contracts relating to a forecast reliability gap. The MLO operates between T-3 and T-1 when the Retailer Reliability Obligation (RRO) is triggered. MLO generators under the MLO are required to post bids and offers, with a maximum spread, on an approved exchange for standardised products that cover the period of the gap.
In New South Wales the MLO generators are Origin, AGL and Snowy Hydro. The MLO began on 31 December 2020.
Forecast reliability gap
On 27 November 2020 AEMO requested the AER to make a T-3 reliability instrument.
Stakeholders submissions closed on Monday 7 December 2020.