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 (EPWA) developed for consultation an Exposure Draft of WEM Investment Certainty and RCM Review 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.
Stakeholder feedback has been considered and a summary of responses to submissions received can be found below.
The Wholesale Energy Market (Reserve Capacity Reform) Rules 2023 were approved by the Minister for Energy on 6 December 2023 and published in the Government Gazette on 12 December 2023.
The Wholesale Energy Market (Reserve Capacity Reform) Rules 2023 (RCM Reform Rules) were laid out in four schedules assuming a certain order, in which they were to be sequenced/commenced, with only the first schedule commencing upon the gazettal of the RCM Reform Rules in December 2023.
Exposure Draft of the Wholesale Electricity Market (WEM) Investment Certainty Review and RCM Review WEM Amending Rules
AEMO subsequently revised the commencement timeline for implementing the RCM Reform Rules and identified a number of areas, in which it did not have the ability to implement the RCM Reform Rules as originally drafted. This requires changes to the remaining 3 schedules of the RCM Reform Rules, that are yet to be commenced, prior to their implementation.
AEMO presented commencement dates for specific parts of the schedules that remain to be implemented at the Transformation Design and Operation Working Group (TDOWG) meeting 52 on 20 August 2024. Based on the stakeholder feedback at the TDOWG, EPWA and AEMO have developed some changes that would allow for an earlier implementation of the Relevant Level Method.
This Exposure Draft contains two parts:
Part 1 outlines the draft WEM Amending Rules to implement the review outcomes for Initiatives 1 and 2 of the WEM Investment Certainty (WIC) Review; and
Part 2 is to consult on changes that:
⚬ Would allow for an earlier implementation of the Relevant Level Method; and
⚬ Address issues that EPWA, in consultation with AEMO, has identified during the re-sequencing of the RCM Reform Rules, which require further consultation. These include:
- A transitional provision to delay the commencement of certain obligations related to Flexible Reserve Capacity if there is an excess of Flexible Capacity Credits to allow AEMO to bring the implementation of the Relevant Level Method forward;
- Additional changes to the determination of the Individual Reserve Capacity Requirement (IRCR) of Associated Loads that are part of a Demand Side Programme dispatched during an IRCR Interval, which were previously consulted on in the Exposure Draft of the IRCR adjustment for Associated Loads Amending Rules; and
- Changes to clauses previously consulted on under the Wholesale Electricity Market Amendment (Miscellaneous Amendments No 3) Rules 2024 that will be implemented together with the remaining RCM Reform Rules schedules.
Following industry consultation and legal review, the proposed WEM Investment Certainty and RCM Review Amending Rules in the Exposure Draft, together with any additional changes to provide for the re-sequencing of the remaining 3 schedules of the RCM Reform Rules, will be submitted to the Minister for Energy for making and gazettal.
EPWA invites stakeholder feedback on the Exposure Draft, with the consultation period closing at 5:00pm WST on 9 December 2024. Late submissions may not be considered.
Submissions can be emailed to energymarkets@demirs.wa.gov.au.
Any submissions received will be published on Energy Policy WA unless requested otherwise.
