National Electricity Market reform enables cost equality for retailers

1 min

Following the successful introduction of three major National Electricity Market (NEM) reforms in October 2021, Global Settlement (GS) has officially commenced to improve market efficiency and equality.

In 2018, the Australian Energy Market Commission made a final ruling to change settlement of the NEM to ensure all retailers are settled in the same way. With the commencement of GS, all retailers will now share the cost of Unaccounted For Energy (UFE).

Historically, local retailers carried the cost of UFE, which is residual electricity losses such as unaccounted for technical losses, commercial losses and meter profiling errors.

AEMO’s Executive General Manager Reform Delivery, Violette Mouchaileh, said: “This is an important market reform that reflects the evolving energy system and aligns very closely to AEMO’s priority areas as we navigate the energy future to the benefit of the market and all consumers.

“The extensive stakeholder collaboration has been valuable in the decision-making process and outcomes, and essential for market readiness,” she said.

Several months of deep stakeholder collaboration supported delivery of this key reform, which enables improved transparency that will lead to fewer settlement disputes between retailers, competition on equal terms, and improved risk allocation.

This milestone follows a soft-start in October 2021, alongside the commencement of five-minute settlements, when AEMO began publishing UFE data to assist industry preparation.

Market Trials also allowed industry participants the opportunity to test the GS preliminary and final invoices, with no major issues identified.

As the industry transitions to GS, preparing for the first preliminary invoice to be delivered on 13 May 2022, AEMO will continue to provide ongoing support. 

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