The Coordinator of Energy is conducting a review of the supplementary capacity provisions of section 4.24 of the Wholesale Electricity Market Rules (WEM Rules).
Clause 4.24.19 of the WEM Rules requires that after each call for tenders for supplementary capacity or otherwise acquiring Eligible Services by the Australian Energy Market Operator (AEMO), the Coordinator of Energy must review the supplementary capacity provisions. The Coordinator of Energy must also undertake a public consultation process on the outcomes of the review.
On 11 August 2023, AEMO commenced a process to acquire supplementary capacity in accordance with section 4.24 of the WEM Rules by publishing a call for tender.
AEMO concluded the formal tender process and direct negotiations for the 2023-24 summer on 22 November 2023 and 7 March 2024, respectively. Eight Supplementary Capacity Contracts were awarded.
AEMO contracted 160 MW of supplementary capacity, including load reduction and energy production services.
The supplementary capacity review is assessing whether:
the supplementary capacity provisions require improvements; and
the improvements introduced by the 2023 supplementary capacity review have provided better outcomes in the latest supplementary capacity process.
On 18 June 2024, Energy Policy WA published a Consultation Paper which sets out proposals to amend the supplementary capacity provisions.
The window for submitting feedback closed at 5:00pm (AWST) on 8 July 2024.
On 26 July 2024, Energy Policy WA published an Information Paper that presents the final 2024 Supplementary Capacity Review outcomes, which included proposed amendments:
- Requiring AEMO to use reasonable endeavours to identify potential suppliers of supplementary capacity (using data provided by Western Power) and provide those potential providers with information on the call for supplementary capacity tender;
- Ensuring that provisions in the standard form contract mirror similar provisions in the WEM Rules to the extent practical, including the methodology for measuring demand side response;
- Allowing the Coordinator the discretion to review the supplementary capacity provisions only if substantial changes are required following a call for tender of supplementary capacity;
- Removing the requirements to publish the maximum contract value per hour in the call for tender to ensure effective competition amongst service providers; and
- Providing transparency to the market regarding the costs of supplementary capacity, by including an obligation for AEMO to publish the availability and activation price associated with each contract, once all contracts have been signed.
A copy of the Information Paper: 2024 Supplementary Capacity Review is available below.
The Minister for Energy has approved the Wholesale Electricity Market Amendment (Supplementary Capacity No. 3) Rules 2024, which implement changes to the WEM Rules in accordance with the above review outcomes and a notice of the amendments was published in the Government Gazette on Friday, 26 July 2024.
