The Australian Energy Regulator (AER) has completed its review and consultation of the reliability instrument request from the Australian Energy Market Operator (AEMO) for South Australia in the 2026–27 period.
Following the review and consideration of submissions, we have decided to make a T-3 reliability instrument for South Australia.
Decision
Following our review, the AER has decided it is appropriate in the circumstances to make the reliability instrument.
The details of the T-3 South Australia reliability instrument are:
- Working weekdays from 1 December 2026 to 28 February 2027 (inclusive), for the trading periods between 5 PM and 9 PM AEST (National Electricity Market time).
Approving the T-3 request triggers the Retail Reliability Obligation (RRO) in South Australia. This signals that liable entities in South Australia should make prudent contracting decisions, taking into 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, Market Liquidity Obligation (MLO) generators in South Australia are required to offer MLO contract products on the Australian Stock Exchange (ASX) to add liquidity and ensure there are contracts available. This ensures there will be sufficient qualifying contracts available for liable entities in South Australia to cover their share of one-in-two-year peak demand throughout the forecast reliability gaps.
The MLO generators in South Australia are currently AGL Energy and ENGIE.
About the RRO
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, which the AER then reviews in accordance with the decision-making criteria set out in the National Electricity Rules.
The decision making criteria provides that the AER must only have regard to whether:
- there are no material errors in AEMO's calculations or input data as it relates to the reliability forecast;
- AEMO has not made any assumptions underpinning its forecast data that are inaccurate and which have had a material impact on unserved energy outcomes in the reliability forecast; and
- AEMO has used reasonable endeavours to prepare the reliability forecast in accordance with the Forecasting Best Practice Guidelines.
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.