Retailer Reliability Obligation

The Australian Energy Regulator (AER) is supporting improving reliability in the NEM by implementing the Retailer Reliability Obligation (RRO) alongside the ESB. At the 26 October 2018 COAG Energy Council (COAG EC) meeting, Ministers agreed that the Energy Security Board (ESB) will progress development of draft National Electricity Law amendments that would give effect to a Retailer Reliability Obligation (the Obligation).

The ESB was tasked to develop the National Electricity Rules (the Rules) necessary to implement the Obligation. The draft Rules were published for stakeholder consultation on 8 March 2019. The final Rules are proposed to be in place by 1 July 2019.

Guidelines to be developed

As set out in the Rules, the AER is responsible for developing a number of Guidelines on certain aspects of the RRO. Due to timing constraints the Rules specify that the AER will develop a number of interim guidelines which will be in place for one to two years. During this time the AER will run a full consultation process to develop final guidelines. The AER must develop the following guidelines:

The Reliability Instrument Guideline will explain how the AER will have regard to the criteria in the rules when assessing whether or not to make a reliability instrument following a request from AEMO, and set out the AER consultation process with stakeholders when deciding on a reliability instrument request.

The Market Liquidity Obligation (MLO) Guideline will broadly set out the obligation of generators in the event of a trigger. It will address: 

  • the methodology and process for determining market generator capacity
  • the allocation of generator capacity amongst generator groups
  • the information generators are required to provide to the AER
  • the process for registering and appointing MLO nominees
  • the criteria for selecting the MLO exchange
  • what MLO products the AER approves
  • how the AER will monitor compliance, and
  • how the MLO Register will be established and maintained.

The Contracts and Firmness Guideline will provide guidance on:

  • the types of contracts
  • the firmness methodology and how to apply it
  • the criteria for approving bespoke firmness methodologies
  • how adjustments to net contract position will be determined
  • the reporting process for obligated parties, and
  • how the AER will assess net contract position against a liable entity’s scaled demand.

The Forecasting Best Practice Guideline which will outline the forecasting process expected of AEMO. When assessing a reliability instrument request we will consider whether AEMO has followed our guideline.

The Opt-in Guideline will set out the arrangements for large consumers to opt-in to participating in the RRO themselves instead of through their retailer. The guidelines will:

  • set out the process for establishing and maintaining the opt-in register
  • the information to be included in the register
  • the process for registration and deregistration as an opt-in customer, and
  • how the AER Opt-in Guidelines will work with the AEMO Opt-in Procedures if AEMO chooses to make one.

The Reliability Compliance Procedures and Guideline will set out how the AER will assess compliance for the RRO. 

Timetable for guideline development

Guideline Consultation on interim guideline Interim guideline published Final guideline published

Reliability Instrument Guideline 

Consultation April 2019

31 July 2019

31 July 2020

Market Liquidity Obligation Guideline 

Consultation April/May 2019

31 August 2019 31 December 2020

Contracts and Firmness Guideline

Consultation May 2019

31 August 2019 31 December 2020
Forecasting Best Practice Guideline  

Consultation May/June 2019

30 September 2019

30 November 2020

Opt-in Guideline

Late 2019/early 2020 TBC No interim arrangements

30 June 2020

Reliability Compliance Procedures and Guideline  Consultation mid 2020 No interim arrangements 31 December 2020

Energy Security Board consultation

The ESB has released a consultation paper on the draft rules, which outlines the RRO process in detail on the COAG EC website.

The ESB is also running public consultation discussion forums on Monday 18 March 2019 in Melbourne, and Wednesday 20 March 2019 in Sydney. Further workshops on detailed elements will be held in Melbourne on Monday 25 March 2019, and Sydney on Wednesday 27 March 2019. See the COAG EC website for further details.