Energy Market Review – Reliability Panel

WEM Information

Feb 03
Energy Market Review – Reliability Panel

On 3 February 2016, the Public Utilities Office (PUO), through its Energy Market Review (EMR) team, released a position paper on the proposed design of a reliability advisory committee for Western Australia.

The EMR team notes that some of the existing documents detailing current reliability standards in WA, such as Western Power’s Technical Rules and the Access Arrangement, Electricity Networks Access Code 2004, will be repealed once Chapter 5 of the National Electricity Rules is adopted as this already provides a connection, access and compliance framework for larger generators and customers, as well as performance standard obligations on network service providers.

Therefore, the EMR team considers that, where appropriate, reliability functions for the Wholesale Electricity Market (WEM) should be transferred to an independent body to provide regulatory clarity, as well as improve governance around the setting of standards.

The position paper explains that, in the National Electricity Market (NEM), the majority of reliability issues are addressed by the Australian Energy Market Commission’s (AEMC) Reliability Panel.  However, there are some aspects of the Wholesale Electricity Market (WEM), such as the reliability issues relating to generation adequacy (capacity), that have no equivalents in the National Electricity Rules.  It is considered more cost efficient and practical for a local entity to assume responsibility for system reliability functions, rather than the AEMC’s Reliability Panel extending its role and experience to cover WA specific issues which is unlikely to be supported by other States particularly given the likely cost impact of the expanded functions.

The EMR recommendation, supported by the Commonwealth, is for an independent WA entity, the Economic Regulation Authority (ERA) to assume responsibility for future power system reliability functions.  The core determination functions for a local entity would include:

  • the power system reliability standard (i.e. the planning criterion methodology and market settings);
  • frequency operating standards;
  • the system restart standard; and
  • jurisdictional standards relating to network reliability (contained within the Network Quality and Reliability of Supply Code).

In assuming responsibility for system reliability, the EMR team suggests that the ERA will be required to establish (e.g. via terms of reference) an advisory panel of technical experts (Reliability Advisory Committee) that it must consult to provide technical advice and input on reliability issues.  EMR recommendations for the reliability panel are for it to have 3-9 members who are senior in the WA electricity industry, can give impartial advice, are credible, have integrity and a sense of duty.

The position paper proposes that stand-alone regulations to confer reliability functions on the ERA are made under new regulation-making power in the Electricity Industry Act 2004. These regulations would also require the ERA to establish the Reliability Advisory Committee to assist with decision making in regard to those functions.

Interested parties have until 17 February 2016 to make submissions on the proposed design of the new reliability panel and corresponding arrangements for system reliability in WA.

Definitions:

Reliability standards referred to above and to be transferred to the ERA are:

  • Generation adequacy reliability – the need to ensure there is enough capacity to generate and transport electricity to meet all consumer demand; and
  • Network reliability – the performance of the transmission and distribution networks within the South West Interconnected System (SWIS).

The (closely related) concept of power system security is the ability of the power system to survive sudden shocks or upsets such as faults or equipment failures without cascading failures or loss of stability (e.g. normal, high risk and emergency operating states).  The setting of power system security standards will largely fall under the remit of the AEMC.