The Australian Energy Regulator today issued an issues paper which proposes improved service standard incentives for electricity transmission companies.
"Data collected by the AER shows that transmission outages account for 30 to 40 per cent of total congestion costs," AER Chairman, Mr Steve Edwell, said.
"Outages can force low cost generation to be switched off, and more expensive generation to be switched on. This increases prices for electricity in the spot market. At times the impact is very high.
"Outages can also make it more difficult for retailers and generators to manage their risks. Retailers and generators can establish new contracts to manage the impact of outages if they have enough time. NEMMCO data shows that in many cases the notice is insufficient.
"The AER proposes to introduce a new service standards incentive scheme which rewards transmission companies for reducing the number and duration of outages that have a market impact and providing more advanced notice of outages.
"The scheme will provide transmission companies with improved incentives to time outages in off-peak periods, conduct live line work and better co-ordinate outages.
"The AER has undertaken considerable work in the lead up to developing its proposals. It first developed measures of the market impact of congestion and worked with NEMMCO to collect the data. Detailed reports covering 2003/04, 2004/05 and 2005/06 are available on the AER's website. The AER also established a working group comprising representatives from industry and end users. The working group has made a valuable contribution to the project.
"The AER will consult with transmission companies and other stakeholders in developing the incentive scheme and will consider submissions received on the issues paper before issuing a draft determination later this year.
"The aim is to finalise an incentive regime ahead of the next round of revenue determinations for the New South Wales and Tasmania transmission companies," Mr Edwell said.
The issues paper will be available on the AER website.