The Australian Energy Regulator (AER) has completed its review and consultation of the reliability instrument requests from the Australian Energy Market Operator (AEMO) for South Australia in 2024, and New South Wales in 2025/26.
Following the review and consideration of submissions, we have decided to make the T-1 reliability instrument for South Australia and T-3 reliability instrument for New South Wales.
Decision
Following our review, the AER has decided it is appropriate in the circumstances to make the reliability instruments.
The details of the T-1 South Australia reliability instrument are:
- Working weekdays from 8 January to 29 February 2024 (inclusive), for the trading periods between 5 PM and 9 PM AEST.
The details of the T-3 New South Wales reliability instrument are:
- Weekdays from 1 December 2025 to 28 February 2026 (inclusive), for the trading periods between 2 PM and 9 PM AEST.
Approval of the T-1 request moves the RRO to the next stage in South Australia. This requires liable entities to provide net contract position reports to the AER, reflecting contracts held on 6 January 2023, which we have set to occur on 31 July 2023.
Approving the T-3 request triggers the RRO in New South Wales. This signals that liable entities in New South Wales should make prudent contracting decisions, taking in to 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.
To support liable entities, the Market Liquidity Obligation (MLO) generators in New South Wales – currently Snowy Hydro, AGL and EnergyAustralia – are required to offer MLO contract products on the ASX to add liquidity and ensure there are contracts available.[/no-lexicon]
About RRO
The Retailer Reliability Obligation (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 us with a reliability instrument request, which we then review in accordance with the decision-making criteria set out in the National Electricity Rules
In doing so, we consider if AEMO’s reliability forecast contains any material errors in either calculation or input data, or inaccurate assumptions that materially impact the forecast reliability gap. We also check if AEMO has used reasonable endeavours to prepare the reliability forecast in accordance with the AER’s 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.