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 New South Wales and Victoria in the 2026/27 period.
Following the review and consideration of submissions, we have decided to make T-3 reliability instruments for New South Wales and Victoria.
Decision
Following our review, the AER has decided it is appropriate in the circumstances to make the reliability instruments.
The details of the T-3 New South Wales reliability instrument are:
- Working weekdays from 1 December 2026 to 31 March 2027 (inclusive), for the trading periods between 3 PM and 10 PM AEST (National Electricity Market time).
The details of the T-3 Victoria reliability instrument are:
- Weekdays from 1 December 2026 to 28 February 2027 (inclusive), for the trading periods between 3 PM and 9 PM AEST (National Electricity Market time).
Approving the T-3 requests triggers the Retail Reliability Obligation (RRO) in both New South Wales and Victoria. This signals that liable entities in New South Wales and Victoria should make prudent contracting decisions, taking into 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, Market Liquidity Obligation (MLO) generators in New South Wales and Victoria are required to offer MLO contract products on the ASX to add liquidity and ensure there are contracts available. This ensures there will be sufficient qualifying contracts available for liable entities in New South Wales and Victoria to cover their share of one-in-two-year peak demand throughout the forecast reliability gaps.
The MLO generators are:
- in New South Wales – currently AGL Energy, Energy Australia and Snowy Hydro
- in Victoria – currently AGL Energy, EnergyAustralia and Snowy Hydro.
About the RRO
The 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 the AER with a reliability instrument request, which the AER then reviews in accordance with the decision-making criteria set out in the National Electricity Rules.
The decision making criteria provides that the AER must only have regard to whether:
- there are no material errors in AEMO's calculations or input data as it relates to the reliability forecast;
- AEMO has not made any assumptions underpinning its forecast data that are inaccurate and which have had a material impact on unserved energy outcomes in the reliability forecast; and
- AEMO has used reasonable endeavours to prepare the reliability forecast in accordance with the 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.