Reserve Capacity Mechanism Review

The Coordinator of Energy has undertaken a review of the Reserve Capacity Mechanism (RCM) under clause 2.2D.1 of the Wholesale Electricity Market (WEM) Rules. The RCM Review incorporates the Coordinator’s first review of the Planning Criterion under clause 4.5.15 of the WEM Rules.

The MAC established the RCM Review Working Group (RCMRWG) to support the Coordinator’s review. Papers and detailed minutes of the RCMRWG meetings are published on the Reserve Capacity Mechanism Review Working Group page, and the relevant MAC papers and minutes are available here Market Advisory Committee.

The RCM Review is being conducted in three stages: 

• Stage one focused on the definition of reliability and the characteristics of the capacity needed in future years, with this stage including the Planning Criterion, the RCM products, the methods for assigning Certified Reserve Capacity (CRC) and the Benchmark Reserve Capacity Price (BRCP). 

• Stage two assessed how the outcomes of stage one affect the operation of other parts of the RCM, including the Individual Reserve Capacity Requirements (IRCR), Demand Side Programmes (DSPs), outage scheduling and the refunds mechanism. 

• Stage three will deliver detailed design in the form of proposed rule amendments. 

The Stage 1 Consultation Paper was published on 29 August 2022. The paper sets out the findings and recommendations resulting from Stage 1 of the RCM Review. It presents proposals for changes to the design of the:

• Planning Criterion
• RCM products
• Benchmark Reserve Capacity Price (BRCP)
• Capacity certification process

The window for submitting feedback closed at 5:00pm on 29 September 2022.

Stage 2 of the RCM Review has culminated with the Reserve Capacity Mechanism Review: Information Paper (Stage 1) and Consultation Paper (Stage 2). This paper is of two Parts:  

• Part 1 is an Information Paper that presents the final design for elements of the RCM investigated developed in stage one of the RCM Review including: 

• the Planning Criterion; 

• the new Flexible Capacity product; 

• the BRCP; and 

• methodologies for assigning CRC to the different capacity products and Capability Classes. 

• Part 2 is a Consultation Paper that sets out the findings and recommendations arising from stage two of the RCM Review, presenting proposals for changes to the design of: 

• Individual Reserve Capacity Requirement (IRCR); 

• CRC allocation and dispatch for DSPs; 

• testing, outages and refunds; and 

• two new proposals on elements of stage one (unserved energy target in the Planning Criterion and the party responsible for setting the BRCP reference technologies). 

The window for submitting feedback closed at 5:00pm on 6 June 2023. 

The RCM Review Information Paper (Stage 2) was published on 2 August 2023. The paper presents the Review Outcomes for elements of the RCM investigated in stage 2 of the RCM Review, which were subject to public consultation in May 2023. This paper is for information only, presenting the Review Outcomes for:

• IRCR for both Peak Capacity and Flexible Capacity;
• CRC allocation and dispatch for DSPs;
• the testing, outages and refunds regime;
• the unserved energy target in the Planning Criterion;
• the party responsible for setting the BRCP reference technologies; and
• the mandatory nature of the Expression of Interest (EOI) process.

The Coordinator of Energy conducted a review of the Benchmark Capacity Providers for setting the Benchmark Reserve Capacity Prices (BRCP). The requirement for this review was introduced as part of the Stage 2 RCM Review Outcomes. The Benchmark Capacity Providers Review was undertaken in consultation with the Market Advisory Committee and the RCM Review Working Group. 

Exposure Draft of the RCM 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 RCM Review outcomes outlined in the RCM Review Information Papers (Stage 1 and Stage 2).  The draft WEM Amending Rules were developed in consultation with the RCM Review Working Group.

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 19 October 2023.