Guide to Market Suspension in the NEM

For information on the market event in June 2022 please click link: AEMO | NEM events and reports

When can AEMO suspend the spot market?

Under clause 3.14.3 of the National Electricity Rules (NER), AEMO may declare the spot market to be suspended in a region when any of the following occur:

  • The power system in the region has collapsed to a black system
  • AEMO has been directed by a participating jurisdiction to suspend the market following declaration by that jurisdiction of a state of emergency
  • AEMO determines that it has become impossible to operate the spot market in accordance with the provisions of the NER.

The NER define a black system as an absence of voltage on the transmission system affecting a significant number of customers. AEMO generally considers a significant number of customers to be affected if the voltage collapse results in the loss of 60% of forecast customer load in a NEM region, as indicated in Section 4 of SO_OP_3715 - Power System Security Guidelines (1 MB, pdf).

The spot market is taken to be suspended at the start of the dispatch interval in which AEMO makes the declaration.

AEMO can resume the spot market when none of the three conditions apply and AEMO is satisfied that there is minimal possibility of suspending the market within the next 24 hours due to the same cause. If the spot market was suspended due to a direction from a participating jurisdiction, then AEMO can only resume the spot market after that participating jurisdiction has revoked the direction. AEMO will provide a minimum two hours’ notice before resuming the spot market after a black system or jurisdictional direction to allow an orderly transition to normal pricing, or a minimum 30 minutes’ notice if the market is suspended due to a failure of AEMO’s central dispatch process.

SO_OP_3706 - Failure of Market or Market Systems (680 KB, pdf) provides further information on how AEMO manages the above process.


Communications during Market Suspension

AEMO will issue NEM Market Notices to declare and end a market suspension in a region, and to inform registered participants of the cause of the market suspension, what pricing applies in the suspended region, when those prices are revised, and situation updates.

In some circumstances, AEMO may also release Media Statements to provide further information.

In the event of failure of the normal Market Notice message system, AEMO will communicate with registered participants using the AEMO Emergency Messaging System (Whispir).

Bidding and Dispatch during Market Suspension

Bidding and dispatch will continue in accordance with NER rule 3.8 where AEMO considers it is practical and reasonably possible to do so. Where possible, dispatch instructions will be issued electronically via the automatic generation control system. Otherwise, AEMO may issue dispatch instructions in any other form that is practical in the circumstances.

If, in AEMO’s reasonable opinion, the above is not possible, then AEMO may use the most recently published valid pre-dispatch schedule if it is still current.

Section 12.4 of SO_OP_3705 - Dispatch (693 KB, pdf) refers to the AER's Rebidding and Technical Parameters Guideline (373 KB, pdf) for managing dispatch of generation above minimum safe operating level.

If necessary, AEMO will issue directions to registered participants in accordance with section 116 of the National Electricity Law and NER clause 4.8.9.

Depending on the circumstances of the market suspension, AEMO may decide to:

  • Suspend monitoring of dispatch non-conformance in the suspended region
  • Limit flows between the suspended region and other regions
  • Limit the amount of frequency control ancillary service (FCAS) enabled from providers in a suspended region to meet global FCAS requirements

Pricing during Market Suspension

Spot prices and FCAS prices in a suspended region continue to be set in accordance with NER rule 3.9 where AEMO considers it practical and reasonably possible to do so, and central dispatch is continuing under rule 3.8.

Otherwise, prices will be based on the relevant Market Suspension Pricing Schedule developed and published in accordance with NER clause 3.14.5(e).

AEMO must cap spot prices in regions upstream of a suspended region in accordance with NER clause 3.14.5(f) to minimise the accrual of negative inter-regional settlement residues.

AEMO updates and publishes the Market Suspension Pricing Schedule weekly and 14 days in advance, in accordance with its Market Suspension Pricing Methodology (147 KB, pdf)

The Guide to Market Suspension Pricing Schedule (589 KB, pdf) provides further information on these schedules. These documents can be found on the Market Suspension Pricing Schedule webpage. The Market Suspension Pricing Schedules can also be found in the MARKET_SUSPEND_SCHEDULE table of the MMS Data Model.

Market Suspension Compensation

Following Market Suspension Pricing Schedule (MSPS) periods AEMO is required to pay compensation to eligible Market Suspension Compensation Claimants if prices in the MSPS are not sufficient to cover their estimated costs. Compensation will be calculated as per NER clauses 3.14.5A(d) and 3.14.5B.

Under NER clause 3.14.5A(h) AEMO has developed its Market Suspension Compensation Methodology (318 KB, pdf) and Schedule of benchmark values 2023 - 24 (20 KB, xlsx). The schedule of benchmark values will be updated no later than one month after each publication of the Integrated System Plan.

Market Data Quality

During a market suspension where AEMO receives unreliable metering data for power system quantities used in central dispatch, AEMO may reject this data and automatically substitute it prior to publication with last good data, estimated data from alternate sources, manually replaced data or (in the case of generating unit MW) the previous dispatch target.

SO_OP_3706 - Failure of Market or Market Systems (680 KB, pdf) provides further details of this process.

For any queries on the above processes, please contact the AEMO Support Hub.

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