EUAA Submission: AEMC Reliability Rule Change – Market Price Cap, Cumulative Price Threshold and Administered Price Cap
Emily Wood | June 22, 2023
‘…The EUAA does not support the rule change as presented in the Consultation Paper (‘Paper’) because we do not consider the analysis presented by the Panel and the Commission is robust enough to justify that the changes are consistent with the NEO and the long-term interests of consumers.
Specifically:
- The NEM is no longer an energy only market but a hybrid energy/capacity market fast moving towards the capacity end of the spectrum. The introduction of a variety of capacity support mechanisms and jurisdictional policies clearly shows Energy Ministers have little faith in the ability of the energy only NEM to deliver the level of reliability they desired (political reliability). This suggests to our members that the additional benefits of the proposed large increase in MPC and CPT are not worth the cost to consumers. We look forward to the Commission in its Draft Determination providing the research that gives consumers confidence that they will not pay twice for the same level of reliability – once through jurisdictional schemes (such as the proposed Federal Capacity Incentive Scheme and the NSW storage LTESA scheme) and again through higher wholesale prices from a higher market price cap.
- The APC analysis completely ignores the impact of the Gas Mandatory Code on the appropriate level of the APC as it relies on now outdated analysis completed in 2022. There is no analysis of the actual compensation paid from the June 2022 APC event in assessing whether there is still ‘undue reliance on compensation arrangements under high fuel price events. There is no analysis as to why a higher APC for all generation and storage is a lower cost alternative to either a $300/MWh cap and access to compensation or a more targeted support. This more targeted support would be in addition to the extensive support already provided under e.g. NSW Roadmap LTESAs, AEMO offtake agreements and the forthcoming Capacity Investment Scheme.
To be clear, our position on the rule change may change depending on the level of additional analysis provided in the Draft Determination and we are happy to engage with the Commission as it develops that additional analysis…’
Please download attachment to read full submission.
