EMR –Market Power Mitigation recommendations

WEM Information

Nov 09
EMR –Market Power Mitigation recommendations

At the end of October, the Public Utilities Office (PUO) published its report on the Market Power Mitigation Mechanisms for the Wholesale Electricity Market.  This references a report prepared by the Brattle Group that was appointed to conduct the review of mitigation mechanisms that could be applied in the SWIS.  The findings and recommendations of the Brattle Group agreed with the EMR’s position, expressed in an earlier Position Paper: that the current approach to market power mitigation in the WEM is effective and should be retained with the following improvements:

  • several amendments to the Wholesale Electricity Market Rules to better define prohibited pricing behaviour – including clarification around what constitutes unacceptable bidding behaviour;
  • development of a workable definition of SRMC;
  • consideration of whether or not to increase the market offer price caps – to capture a greater percentage of generator dispatch cycles;
  • continuation of the use of screening analyses as part of a behavioural market power mitigation approach focussed on ex-post observed deviations from SRMC – helps to discipline behaviour of market participants;
  • mitigation of the spot (balancing) market and the STEM consistent with the proposed revisions; and
  • application of essentially the same approach to mitigating market power in the ancillary service markets.

The PUO states that it expects design papers to be published by June 2017 and draft rules by September 2017.  In addition, draft SRMC bidding guidelines will be developed in consultation with the ERA, the AEMO and the stakeholder consultation group.  The PUO expects this to take the form of an initial discussion paper for public consultation in mid-2017, followed by a position paper later in that year.