The Coordinator has conducted the Cost Allocation Review, in consultation with the Market Advisory Committee (MAC), under clause 2.2D.1 of the WEM Rules.
The Cost Allocation Review has reviewed the allocation of Market Fees and ESS costs in the WEM.
The MAC established the Cost Allocation Review Working Group (CARWG) to support the Coordinator’s review. Papers and detailed minutes of the CARWG meetings are published on the CARWG webpage at Cost Allocation Review Working Group, and the relevant MAC papers and minutes are available on the MAC webpage at Market Advisory Committee.
The Coordinator published a Cost Allocation Review Consultation Paper that:
- set out the preliminary assessment of the cost allocation methods against the guiding principles for the review, including whether the methods were aligned with the causer‑pays principle;
- proposed options for cost allocation methods that were more consistent with the guiding principles, where it was determined that methods did not align well with the guiding principles;
- provided a quantitative assessment of the impact of the proposed options on Market Participants, in comparison to the status quo; and
- set out proposals for changes to the cost allocation methods in the WEM Rules, where relevant.
The window for submitting feedback closed at 5:00pm (AWST), 9 February 2023
The Cost Allocation Review culminated with the Cost Allocation Review Information Paper that presented the outcomes from the Cost Allocation Review for the allocation of:
- Market Fees;
- Regulation Raise and Lower service costs;
- Contingency Reserve Raise service costs;
- Contingency Reserve Lower service costs; and
- Other Essential Systems Services cost.
Exposure Draft of the Cost Allocation Review Wholesale Electricity Market (WEM) Amending Rules
Energy Policy WA developed for consultation an Exposure Draft of WEM Amending Rules to give effect to the CAR Review outcomes outlined in the CAR Review Information Paper. The draft WEM Amending Rules were developed in consultation with the MAC and its CAR Review Working Group.
This Exposure Draft is based on the 29 April 2023 Consolidated Companion Version of the WEM Rules.
An overview of the draft changes to the WEM Rules is provided on the first page of the Exposure Draft at the link below.
The window for submitting feedback closed at 5:00pm (AWST) 28 November 2023.
Stakeholder feedback has been considered and a summary of responses to submissions received on the Exposure Draft can be found below.
Following its consideration of stakeholder submissions, EPWA finalised the WEM Amending Rules, which included changes to the methods used to allocate the costs of Regulation and Contingency Reserve Lower Services.
The Wholesale Electricity Market Amendment (Cost Allocation Reform) Rules 2024, were approved by the Minister for Energy on 4 June 2024 and published in the Government Gazette on 7 June 2024.
Further changes to refine the cost allocation methodology for the Contingency Reserve Raise Service were consulted on within the Miscellaneous Amendments No. 3 Exposure Draft. Stakeholders were invited to provide written feedback with consultation closing on 8 July 2024.
EPWA held a Transformation Design and Operation Working Group meeting on 18 June 2024 at which it presented the proposed amendments. Slides for that meeting are available here.
The Wholesale Electricity Market Amendment (Miscellaneous Amendments No 3) Rules 2024 were approved by the Minister for Energy on 2 October 2024 and published in the Government Gazette on 4 October 2024.
