The Australian Energy Regulator today issued its first electricity market compliance bulletin, Complying with dispatch instructions.
"The operation of the National Electricity Market is governed by detailed rules, the National Electricity Rules", AER Chairman, Mr Steve Edwell, said today. "The aim of this and future compliance bulletins is to provide guidance on the AER's interpretation of specific provisions within the rules to assist participants in the market understand their obligations. An understanding of the AER's approach will provide greater certainty and predictability for market participants and reduce compliance costs.
"The issuing of this bulletin follows from an incident in New South Wales in October 2005 which gave rise to a number of compliance issues, including generator obligations to follow dispatch instructions. The AER has previously released its findings from the investigation of this incident (the report is available on the AER's website).
"Every five minutes NEMMCO issues dispatch instructions which tell generators how much electricity to generate. The rules establish obligations on generators to follow the dispatch instructions.
"However, how closely dispatch instructions should be followed has been subject to different interpretations. At times some generators have dispatched more than instructed for commercial reasons.
"The AER is of the view that there are risks to system security if generators fail to accurately follow instructions and that the market rules establish a clear obligation for compliance in this area.
"The compliance bulletin released today provides guidance on generator obligations to follow dispatch instructions. The AER will closely monitor outcomes and will investigate and consider all available enforcement options where a generator fails to follow instructions including, where appropriate, infringement notices and legal proceedings".
Background
NEMMCO issues dispatch instructions to scheduled generators every five-minutes as part of the dispatch process in the National Electricity Market.
Clause 4.9.8(a) of the Rules provides:
A Registered Participant must comply with a dispatch instruction given to it by NEMMCO unless to do so would, in the Registered Participant's reasonable opinion, be a hazard to public safety or materially risk damaging equipment.
Clause 4.9.8(a) is a civil penalty provision. The AER can issue an infringement notice for payment of a civil penalty of $20,000 or institute legal proceedings in the Federal Court seeking a civil penalty of up to $100,000 together with other orders.