Clause 4.16.3 of the WEM Rules requires the ERA to develop a WEM Procedure documenting the methodology that AEMO must use and the process that AEMO must follow in determining the Benchmark Reserve Capacity Price (BRCP).
Clause 4.16.9 of the WEM Rules requires the ERA to review the WEM Procedure referred to in clause 4.16.3 at least once in every five year period, and to either submit a Rule Change Proposal or initiate a Procedure Change Process, as the case may be, to implement any recommended changes from the review.
At the MAC meeting held on 28 July 2020, the MAC agreed to establish the BRCP Working Group to assist the ERA on its review of the Market Procedure under clause 4.16.19.
The BRCP Working Group’s scope of work was to assist the ERA with its:
- review of the calculation method for the weighted average cost of capital (WACC) included in the BRCP calculation and the underlying variables in the WACC; and
- assessment of cost items to be included in the calculation of the BRCP and the estimation method for these cost items.
For the purposes of item 2, the intent was to develop a framework to identify cost items and to assess the suitability of the current Market Procedure against the framework.
The ERA provided secretariat support for the BRCP Working Group. The only standing member of the Working Group was the Chair appointed by the ERA. The Chair was Sara O’Connor.
As part of its review of the WEM Procedure, the ERA published the procedure change proposal on 15 September 2020 and invited comments on the proposed amendments by 14 October 2020. The ERA received one submission.
On 6 November 2020, the ERA published the procedure change report outlining the reasons for the amendments to the WEM Procedure, a summary of stakeholder feedback and the ERA’s response to the feedback.
The amended WEM Procedure commenced on 9 November 2020 and is available on the ERA website
