The Australian Energy Regulator today issued its third annual report into the Market Impacts of Transmission Congestion (MITC). The report covers the 2005/06 financial year and follows on from the decision and reports on the 2003/04 and 2004/05 financial years which were published in 2005.
"The indicators measure the impact of transmission network congestion on electricity market outcomes," AER Chairman, Mr Steve Edwell, said. "They show total congestion costs in the NEM of $66 million in 2005/06, up from $45 million in 2004/05 and $36 million in 2003/04.
"In part the congestion is due to the inherent limitations of the transmission network, and in part due to transmission outages. The AER's indicators show outages accounted for around one third of total congestion costs.
"The AER will use this data to develop a new service standards incentives scheme. The scheme will link market outcomes with transmission network service providers (TNSPs) revenues.
"The AER will consult with TNSPs and other stakeholders in developing the incentive scheme. The AER plans to commence its consultation process with an issues paper in the second quarter of this year, followed by a draft and towards the end of the year a final determination.
"The aim is to establish an incentive regime ahead of the next round of revenue determinations for the New South Wales and Tasmania transmission network service providers," Mr Edwell said.
The AER has developed the MITC indicators with the assistance of industry. Key findings from the three years of data will be provided as part of the issues paper.
The MITC report will be available on the AER website.