AEMC rejects call for intrusive bidding rules

The Australian Energy Market Commission today published a draft determination rejecting a rule change request by Major Energy Users Inc (MEU) that sought to restrict generator bidding behaviour in the Australian National Electricity Market.

In November 2010, MEU submitted a proposal to the Commission to change the National Electricity Rules that govern how prices are determined in the market. The proposed rule change imposed a restriction on the offer prices that could be submitted by ‘dominant generators’ in the electricity market. Such generators would be obliged to offer all of their available capacity at a price that did not exceed the administered price cap (currently $A300/MWh). Dominant generators would be identified by the Australian Energy Regulator based on the size of their capacity relative to regional demand.

In rejecting the rule change proposal, the Commission found that there was insufficient evidence of ‘substantial market power’ to warrant the introduction of a rule restricting generator dispatch offers in the electricity market. A final determination is due in the second half of 2012.

Frontier (Australia) prepared a response to the MEU rule change proposal for the National Generators’ Group.

For more information, please contact Marita O’Keeffe at m.okeeffe@frontier-economics.com or call on +61 (0)3 9620 4488.

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