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2017 Energy Price Limits Review

02/10/2017
Market Wholesale Electricity Market (WA)
StageFinal Report
ConvenorAEMO WEM
Initiated02/10/2017
Accepting submissions?No

Current Status:

The Economic Regulation Authority (ERA) has approved AEMO's Final Report, the ERA’s determination is available on their website . The revised Energy Price Limits will commence on 1 October 2017.

Background: In accordance with the Market Rules, AEMO has commissioned a review of the Energy Price Limits for the Wholesale Electricity Market (WEM) in the South West interconnected system. An independent consultant Jacobs, was engaged to assist AEMO with revising the maximum prices by conducting an analysis of the relevant costs and the preparation of a draft report.

Approval of 2017 Energy Price Limits

On 15 June, AEMO provided the ERA with its proposal for the Energy Price Limits for 2017. On 22 June, the ERA identified an issue with the methodology used to discount the operating and maintenance costs. This issue specifically relates to the methodology used to calculate the time value of money with respect to start-up costs. AEMO has undertaken a review of the methodology and confirmed the issue.

Accordingly, AEMO has developed a revised methodology and underlying assumptions in consultation with the ERA. The revised methodology and underlying assumptions have changed the Maximum STEM Price and the Alternative Maximum STEM Price calculated in accordance with the overall methodology set out in clause 6.20.7 of the WEM Rules. The updated proposed values are a Maximum STEM Price of $351/MWh and Alternative Maximum STEM Price of $544/MWh for July 2017.

Accordingly AEMO has updated its proposal for the Energy Price Limits to apply for 2017 and submitted its updated proposal to the ERA on 6 September 2017.

The Economic Regulation Authority approved AEMO’s Final Report on 28 September 2017.

Documents relating to this consultation

Submission Received

The 2017 Energy Price Limits are available on AEMO's website.

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