ACCC approves change to contracting provisions to cover power shortfalls

The Australian Competition and Consumer Commission today issued an interim authorisation and draft determination regarding a derogation to the reserve contracting provisions of the National Electricity Code.

The derogation widens the scope of the existing provisions to allow more extensive generation and customer involvement in reserve trading.

A derogation means particular provisions of the code do not apply, or apply in a modified version to certain code participants. In this case the derogation amends the reserve contracting provisions of the code that apply to National Electricity Market Management Company and code participants.

Reserve contracting provisions are used when there is an inadequate supply of electricity in the market. The reserve contracting provisions allow NEMMCO to contract with generation capacity that is not available in the market to ensure adequate levels of supply are attained. At present NEMMCO can only contract for reserves with a certain class of generators and customers.

"By allowing NEMMCO to contract reserve capacity with all generation classes and customers, the effectiveness of the reserve trader provisions in addressing supply shortfalls is greatly improved", ACCC Chairman, Professor Allan Fels, said today. "It will ensure NEMMCO has every opportunity to keep the lights on".

The interim authorisation allows the derogation to be effective for the coming summer, where NEMMCO has already activated the reserve trader provisions in response to forecast supply shortfalls.