EUAA Submission: AEMC National Electricity Amendment (Inter-Regional Settlements Residue Arrangements For Transmission Loops) Rule 2025 – Directions Paper
Emily Wood | July 10, 2025
While AEMC has listened to our earlier recommendations and gone with netting off net positive loops and collecting net negative loops residues from consumers based on per capita collection, the market participants (ie generators) and NSW consumers are pushing back. We will also recommend a review in 2-3 years once the loop is operating and real data can be collected (currently all assumptions are based on theoretical models).
A summary of our submission below:
‘…We consider that all net positive and all net negative cases of IRSR need to be considered for this rule change.
We agree with AEMC that the netting off of both net positive and net negative loops:
“…this approach best manages negative IRSR accruing on one arm of a loop in net positive cases at the lowest cost. Market participants are exposed to the risk of inter-regional price separation (which can result in losses or gains for them), have built expertise in managing these risks, and have access to (and expertise in designing and using) hedging instruments and other products to manage risks”
This approach aligns with EUAA’s principle where the costs and risks are appropriately allocated to those best able to manage them, which market participants clearly are and consumers are clearly not.
Those opposing this approach should consider that the negative arm(s) of a net positive loop and the positive arm(s) in a net negative loop are created because of the combined effects of the physics of electricity flow and the spring-washer effect of having three separate trading regions within the loop; i.e. the negative arm of a net positive loop is created because of the inter-regional trading that created the two positive IRSR arms and is actually an efficient dispatch outcome, while in a net-negative loop the loop will be clamped. To transfer the negative IRSR of a net positive loop to consumers via the Co-ordinating Network Service Provider (CNSP) is a direct transfer of wealth between consumers and the settlement residue distribution (SRD) unit holders, i.e. the SRD unit holders profiteering from consumers. That the SRD unit holders are often the same parties that have the ability to create these dispatch outcomes and who are also opposed to netting off the loop, adds insult to injury for all consumers….’
Please download attached document to read our full submission.
