The Australian Competition and Consumer Commission today issued a draft determination extending a derogation from the National Electricity Code that allows Queensland to calculate electricity loss factors on a forward-looking basis.
The decision relates to the provisions of the code that require wholesale electricity prices to be adjusted to reflect losses in transmission.
These losses arise from the fact that whenever electricity is transmitted from one point of the transmission or distribution network to another, some proportion of electricity is lost due to resistance in the network.
Under the code, the National Electricity Market Management Company (NEMMCO) is responsible for calculating loss factors within the National Electricity Market (NEM) using load and generation data from the previous financial year.
The calculated loss factors apply to energy prices for the following year.
Queensland derogated from the code in 1998 and since this time has been calculating loss factors on a forward-looking basis, based on predicted load and generation data for the next financial year.
The draft determination extends this derogation until either 31 December 2004, or the implementation of NEM-wide forward-looking loss factors, whichever is earlier.
ACCC Chairman, Professor Allan Fels, said this was an important issue as the representation of electrical losses in the NEM plays a significant role in ensuring efficient outcomes in the wholesale energy market.
"The ACCC has already authorised changes to the code allowing loss factors to be based on forward-looking data across the national electricity market as this approach is likely to more accurately reflect the network losses in any given year", he said.
"This improved representation of losses will deliver public benefits by improving the efficiency of wholesale market operations.
"Given the ACCC has approved the NEM-wide implementation of forward-looking loss factors, it seemed sensible to allow Queensland to continue using this method".
A copy of the draft determination is available on the ACCC's website, or from Mrs Maxine Helmling on (02) 6243 1246.