The Australian Energy Regulator today issued its report on the events of 31 October 2005 when the failure of a major transmission line in New South Wales caused significant disruption to the market.
"The AER investigated the response of market participants to the transmission line failure and subsequent events", AER Chairman, Mr Steve Edwell said today. "The investigation did not identify any breach of the National Electricity Rules but identified scope to significantly improve emergency response practices in the NEM. The AER has acted on these findings by seeking changes in some of NEMMCO's practices and reviewing aspects of the Rules dealing with generator ramp rates.
"NEMMCO has a difficult task in responding to incidents like this. It must deal with new and complex issues in tight timeframes. In this case NEMMCO managed most aspects of the incident well, but the outcomes highlighted scope for improvements. The AER has identified three issues.
"The first is outage notification. In order to repair the line the transmission operator (TransGrid) needed an adjacent line to be taken out of service twice. NEMMCO did not provide sufficient advanced notice to the market on one of the occasions of this outage.
"The second is transmission line constraint formulations. NEMMCO manages dispatch of generators using a program which dispatches the cheapest generator subject to constraints such as transmission transfer capabilities and generator availability. On 31 October NEMMCO had to introduce new constraints into the program to reflect the transmission line outages, but there were some periods where these constraints were ineffective.
"The third is infrequent manual updating of data in the dispatch program. Normally data on generator output is automatically fed into the dispatch program using data supplied via dedicated communications facilities. The failure of the transmission line also affected these communication facilities between NEMMCO and two power stations. This meant that NEMMCO had to manually update the actual output of the generators. Initially it did this infrequently.
"Taken together these issues have the potential to compromise system security and affect price outcomes. The AER is seeking from NEMMCO an undertaking to improve its current practices. The AER will make the undertaking publicly available.
"During the event Delta Electricity and Macquarie Generation reduced the ramp rate on some of their power stations. The ramp rate is the rate at which a generator can increase or decrease output. In principle this should be based on the generator's actual capabilities. However, the Rules allow the generators to bid in their ramp rates and in this case Delta Electricity and Macquarie Generation reduced the ramp rate to minimise the commercial impacts of network constraints. These actions did not breach the Rules, but did compromise system security.
"The AER is reviewing the Rule provisions which allow generators to rebid the ramp for commercial purposes with the aim of developing a Rule change proposal which addresses the issue", Mr Edwell said.
The AER has the role of enforcing the Rules and monitoring market outcomes. The AER's practice is to conduct detailed reviews of significant events identified by its ongoing monitoring activities, including its weekly market reports and its incident reports on events which resulted in prices of over $5000/MWh. The 31 October report and the AER's other reports are available at the AER's website.