We have completed our review of, and consultation on, the reliability instrument requests from the Australian Energy Market Operator (AEMO) for South New South Wales and Victoria for the 2027/28 period.
Following review and consideration of submissions on the requests, we have decided to make T-3 reliability instruments for New South Wales and Victoria.
In accordance with section 14K of the National Electricity Law, we have made:
- a T-3 reliability instrument for New South Wales for the forecast reliability gap period of 1 December 2027 to 29 February 2028, and
- a T-3 reliability instrument for Victoria for the forecast reliability gap period 1 December 2027 to 31 March 2028.
We are satisfied that AEMO's forecast reliability gaps in New South Wales and Victoria have been identified in accordance with the National Electricity Rules (NER).
We consider that AEMO used reasonable endeavours to prepare its reliability forecast in accordance with the Forecasting Best Practice Guidelines and the assumptions that underpin AEMO’s forecast data and their impact on unserved energy are accurate and represent forecast future circumstances. Therefore, we consider it is appropriate, having regard to the decision-making criteria set out in clause 4A.C.11 of the NER to make the reliability instrument.
The details of the T-3 New South Wales reliability instrument are:
- Working weekdays from 1 December 2027 to 29 February 2028 (inclusive), for the trading periods between 3 PM and 10 PM AEST (National Electricity Market time).
The details of the T-3 Victoria reliability instrument are:
- Weekdays from 1 December 2027 to 31 March 2028 (inclusive), for the trading periods between 3 PM and 9 PM AEST (National Electricity Market time).
Approving the T-3 requests triggers the Retail Reliability Obligation (RRO) in both New South Wales and Victoria. This signals that liable entities in New South Wales and Victoria 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.
As the Retailer Reliability Obligation (RRO) has been triggered on 22 October 2024, the Market Liquidity Obligation (MLO) will commence:
- in New South Wales on 29 October 2024
- in Victoria on 29 October 2024.
To support liable entities, MLO generators in New South Wales and Victoria are required to offer MLO contract products on the ASX to add liquidity and ensure there are contracts available. This ensures there will be sufficient qualifying contracts available for liable entities in New South Wales and Victoria to cover their share of one-in-two-year peak demand throughout the forecast reliability gaps.
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.