NEM suspension costs lower than expected

2 min

AEMO has published the total amount of additional compensation claims relating to the reliability interventions and suspension of the spot market in all regions of the National Electricity Market (NEM) for the period from 12 to 23 June 2022.

In total, approximately $114m in compensation claims were submitted before the 10 August deadlines, comprising $16m for directions compensation and $98.4m for suspension pricing compensation[1].

The Reliability and Emergency Reserve Trader (RERT) costs already recovered for this period amounted to $76.2m for New South Wales and $3.7m for Queensland.

AEMO CEO Daniel Westerman said that AEMO continues to work with market participants to process the associated costs required to avoid load shedding during the unprecedented events in the NEM.

“The period leading up to and including the suspension of the NEM spot markets was one of the most complex and challenging that AEMO has experienced,” Mr Westerman said.

“From the outset, AEMO has transparently and collaboratively worked with market participants to keep the lights on and work through the compensation and cost recovery process.

“While the claims we’ve received are considerable in value, the total is well below external expectations, which is positive for consumers and market participants already facing challenging conditions,” he said.

The submitted claims will be assessed by an independent expert over the coming months. Once determined, the costs will be allocated in accordance with the National Electricity Rules and recovered from market customers (mainly electricity retailers) in proportion to their energy purchases in the relevant NEM regions during the June event period.

AEMO has also produced a range of reports covering various aspects of this series of events, including publishing the
NEM Market Suspension Incident Report today.

The report captures the operating conditions, incidents and events leading to administered price caps and impact of reduced generation volumes offered into the spot market. Combined with a large number of prior generation outages, this led to shortfalls in electricity reserves, triggering a range of interventions by AEMO to maintain power system reliability and security.

“AEMO took all the steps it could under the National Electricity Rules, such as deferring network maintenance, directing generation availability and activating RERT, while working with jurisdictions and generators to overcome fuel supply chain issues and temporary relax restrictions that limited generation capacity,” Mr Westerman said.

“Despite all these actions, customer load shedding was only narrowly avoided, with generation shortfalls at times adding up to approximately one third of NEM winter peak demand.

“Through the efforts of all involved, there was no disruption to customers’ electricity supply related to this event across the NEM,” he said.


[1] This figure excludes claims to the AEMC relating to administered pricing compensation, which are not yet known.

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