The supply of reliable and secure electricity on Australia’s east coast is managed through the National Electricity Market (NEM). The National Electricity Rules (NER), which governs NEM operations, provide for arrangements to manage supply shortfalls during periods of high demand (e.g. during times of extreme summer heat or cold winters). Market charges associated with these events are designed to maintain reliable energy supply and these charges may sometimes appear on your invoice. To help you understand these costs, all the information you need is right here.
The Australian Energy Market Operator (AEMO) is the central body that manages the daily operation of the National Electricity Market (NEM). It does this by implementing the National Electricity Rules (NER) set by the Australian Energy Market Commission (AEMC). All market participants and energy consumers in the NEM must adhere to the NER, your electricity Retailer takes on this responsibility. As a large business customer, your terms and conditions govern what charges can be passed onto you. Contact your Account Manager for further details.
There are seven main charges:
Each of these different charges are designed to keep the NEM as reliable and secure as possible, and could affect your energy charges in different ways.
This is a general market operational fee charged by AEMO to market participants to cover the cost of managing the NEM. AEMO updates and publishes this fee on their website annually. Alinta Energy passes this cost onto our large business customers based on their volume of electricity consumed each month.
For more information visit AEMO’s Energy Market Fees and Charges.
The NEM power system must operate within a frequency range around 50 Hertz (Hz) at all times, to ensure the safe, secure and reliable transmission of power through the electricity supply chain. Controlling power frequency on the power grid requires the constant balancing of electricity supply and demand. There are a number of different services for FCAS including contingency and regulation and the FCAS cost recovery differs depending on the type of service.
Any fees charged to Alinta Energy for FCAS services may be passed to our large business customers.
For more information on FCAS charges refer to AEMO’s guideline.
If there is a threat to the reliable supply of electricity (such as during peak periods of demand in summer or winter), AEMO can use Reliability and Emergency Reserve Trader (RERT) contracts to fill a supply gap or reduce demand. Under a RERT Contract, counterparties (specifically out-of-market generators not participating in the spot market, and large energy users) are contracted to provide emergency supply or reduce their demand.
Where a RERT contract is activated and/or used, RERT charges are incurred by AEMO and recovered from Market Customers (such as Retailers and large energy users) in the region where it was needed. Retailers, such as Alinta Energy may pass this cost to its large business customers who used electricity in that specific area during that specific time.
For more information on the RERT and related costs refer to RERT.
To avoid reliability supply shortfalls or system security issues during periods of peak demand, AEMO can issue a direction (a market intervention) to generators requesting them to increase their supply of electricity into the grid, or ask large energy users to reduce their consumption for that period. Where a direction is issued, AEMO will settle those third parties under market conditions and may also provide additional compensation for losses.
These market costs are recovered from Retailers such as Alinta Energy and large energy users in the regions benefitting from the intervention.
Where applicable, Alinta Energy will decide to pass this market cost to its large business customers.
For more information on how AEMO calculate charges under the intervention framework, refer their Guide to Intervention Pricing procedure.
Under the NER, AEMO may declare the suspension of the spot market in a region under specific and limited circumstances. Spot and FCAS prices in a suspended region continue to be set in line with normal NEM bidding and dispatch practices, unless AEMO determines it impractical or impossible to continue.
Where AEMO considers it necessary to intervene with central dispatch, prices are based on the Market Suspension Pricing Schedule published on AEMO’s website.
In a suspension environment, AEMO is required to provide compensation to eligible market participants if suspension prices are insufficient to cover their estimated costs. Compensation is calculated in line with regulated processes and these costs are recovered from Market Retailers. Where applicable, Alinta Energy will pass this cost to large business customers who use electricity during a market suspension event.
For more information on the Market Suspension Pricing Schedule, refer to AEMO’s guideline.
AEMO is responsible for balancing supply and demand in the electricity market by matching and dispatching generator bids with consumer demand at all times. Electricity costs associated with energy consumption are charged to Retailers and large energy users on the basis of their metered usage. However, sometimes electricity that has been consumed cannot be accurately allocated. This electricity is referred to as Unaccounted For Energy (UFE) and refers to electrical losses, estimation errors or unmetered loads. With advances in metering and communication technology, AEMO can now more accurately determine where this UFE might occur.
In May 2022, AEMO replaced the older Settlement-by-Difference method of determining this value with a new method called Global Settlement charges. Simply put, Global Settlement means that AEMO now settles the energy market using the same process for all Market Customers (Retailers and large energy users in the spot market).
Under the new arrangement, all Market Customers are billed for the loss-adjusted metered electricity that is consumed within a given region. AEMO* will then allocate the UFE to Market Customers in that local area, pro-rated based on their “accounted-for” energy.
Where Alinta Energy receives a UFE allocation, we will pass on these charges to our large business customers.
* For more UFE information visit:
https://www.aemo.com.au/-/media/files/electricity/nem/5ms/program-information/2020/global-settlement-fact-sheet-updated-july2020.pdf
The NSW Government outlined a plan in their NSW Electricity Strategy to introduce a new certificate scheme to encourage peak demand reduction. In 2021, the NSW Electricity Supply Act 1995 was amended to establish the Peak Demand Reduction Scheme (PDRS).
The mandatory scheme begins in November 2022 and aims to reduce peak electricity demand by incentivising businesses to reduce energy consumption between 2.30pm and 8.30pm during the period 1 November – 31 March. Peak Reduction Certificates are created for every 0.1kW of demand reduction. A retailer is obligated to purchase certificates based on their target which is calculated based on consumption during the four highest demand days in the period less any exempt sites. Where applicable, Alinta Energy will decide to pass this cost to its large business customers.
For more information on this scheme, refer to https://www.energysustainabilityschemes.nsw.gov.au/pdrs.
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