Workshop slides review of the effectiveness of the wem and egrc regulatory scheme

2014 Reports to the

MinisterMarkets TeamKen Michael Room, 25 September 2014

Ensuring quality services for a reasonable price 1

Workshop


Markets Team

Bruce Layman Elizabeth Walters

Jeremy Cook

Natalie Jackson

Holly Medrana

Shibli Khan

Purpose of this

workshop1. Wholesale Electricity

Market2. Electricity Generation

and Retail Corporation Regulatory Scheme


to be considered in preparation of Discussion Papers.

Stakeholder feedback on the effectiveness of:

EMR Review of WEM - Overview of ERA Requirements Considerations from 2013 Report to Minister Workshop

The EGRC Regulatory Scheme Overview of ERA’s Requirements Workshop


Workshop: Content and Process

9:00am to 10.45am

10:45am to 11:00am:

Break

11:00am to 12:00pm


Process

Today October November/December

Early 2015

Preliminary workshop

Individual meetings

Discussion Paper and Public

Consultation

Reports provided to

Minister

Follow up Request a meeting Issues for

consideration Feedback for future

engagement


Handouts:

Addresses matters ERA has raised for a number of years

Industry structure –government ownership

Market Governance Reserve Capacity

Mechanism Constrained network access


Electricity Market

Review: ERA Submission

Perspective- ERA Review based on market as is

Not duplicate EMR Recognise market likely

to be modified Adapt focus


Electricity Market Review Implications for

ERA Review

2014 Review of Wholesale Electricity

Market Triennial WEM Report 2014 Annual WEM

Report to the Minister


Incorporates:


ERA’s review

Assess the effectiveness of the market in achieving the Market Objectives

Investigate market behaviour if it has resulted in the market not functioning effectively

Make recommendations for increasing the effectiveness of the market


promote the economically efficient, safe and reliable production and supply of electricity and electricity related services in the SWIS;

encourage competition among generators and retailers in the SWIS, including by facilitating efficient entry of new competitors;

avoid discrimination in that market against particular energy options and technologies, including sustainable energy options and technologies such as those that make use of renewable resources or that reduce overall greenhouse gas emissions;

minimise the long-term cost of electricity supplied to customers from the SWIS

encourage the taking of measures to manage the amount of electricity used and when it is used.

Market Objectives


Specific requirements for report

Summary of data and analysis compiled by the IMO and ERAAssess effectiveness of each aspect of the market including the effectiveness of the IMO and System Management in carrying out their functionsAssessment of specific events, behaviour, matters that impacted effectiveness of market

Recommend measures for increasing the effectiveness of the market


Reserve Capacity market Market for bilateral contracts for

capacity and energy The STEM Balancing Dispatch process Planning processes Administration of the market,

including Market Rule change process

Ancillary Services

Elements of Market required to be reviewed

Performance of “new” Balancing and LFAS markets Bidding behaviour SRMC requirements Constraint

payments


Considerations from 2013

Report to the Minister

Matters flagged for further review:

Proportion of Capacity offered in Price Ranges by quarter and quarterly Average Peak and Off-Peak Balancing Price

Your Views


Break Return for:2014 Review of EGRC Regulatory Scheme


First annual review of EGRC Regulatory Scheme.


2014 Review of EGRC Regulatory

Scheme


Comprises: The EGRC Regulations The Segregation and Transfer

Pricing Guidelines The (Standard Product)

Wholesale Arrangements

The EGRC Regulatory

Scheme


ERA’s requirements

Review effectiveness of operation of Scheme at least annually and make recommendations for improvement,

Also required to investigate any non-compliance identified by the Auditor General.


Scheme Aims to: ensure Synergy does not unduly

preference RBU and GBU over third party retailers & generators;

provide private sector access to electricity on non-discriminatory terms;

mitigate concerns of private-sector market participants.

Aims of EGRC Regulatory

Scheme


Segregation into business units Transfer pricing Ring fencing

Wholesale trading no discriminating between RBU and competitors no taking into account financial interests of RBU Wholesale Electricity Supply Policy & Wholesale Energy

Credit Policy Standard Products - price notionally paid by RBU for

equivalent product

Compliance Regime AG audits and Authority investigates and enforces

Components of Scheme


Test against: Does it ensure Synergy does not unduly

preference RBU and GBU over third party retailers & generators;

Does it provide private sector access to electricity on non-discriminatory terms;

Does it mitigate concerns of private-sector market participants.

Complexity and cost

Practical experience

How to assess?

Your Views


Level 4, Albert Facey House469 Wellington StreetPerth WA 6000

www.erawa.com.au(08) 6557 7900


Economic Regulation Authority

Contact us:

Government & Nonprofit

Workshop slides review of the effectiveness of the wem and egrc regulatory scheme