The Australian Competition and Consumer Commission has issued a draft determination proposing to authorise, subject to two conditions, changes to the National Electricity Code.
The changes allow National Electricity Market participants greater flexibility in settling their accounts and managing their cash flows with respect to wholesale market operations. The change unlocks potential market efficiencies as a whole by allowing for lower bank guarantees and increasing participation.
"The changes will give participants the option of electing to provide lower prudential guarantees to the market operator if they can better manage their cash flows given the lower trading limits which result from the code change", ACCC Commissioner, Mr John Martin, said. "The changes also provide greater flexibility in settling their accounts. Appropriate measures are incorporated into the changes to ensure that the financial stability of the market is not compromised".
The amendments also recognise the possible need to protect "retail clients", as defined by the Corporations Act 2001, in relation to participation in settlement residue auctions.
Mr Martin noted that the exclusion of retail clients from participation in the settlement residue auctions is likely to be of limited practical effect, as most current and expected future participants are not retail clients, and the scope of the exclusion is fairly limited in the context of the National Electricity Market.