First Stage Rules Consultation Congestion Information Resource (CIR) Guidelines

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1 Mr Ben Blake Manager Electricity Constraints Australian Energy Market Operator PO Box 7326 Baulkham Hills BC NSW 2153 Submitted via 23 March 2012 Dear Mr Blake First Stage Rules Consultation Congestion Information Resource (CIR) Guidelines The generators listed on the side-bar welcome the opportunity to make a submission to the Australian Energy Markets Operator (AEMO) on the First Stage Rule Consultation on the Congestion Information Resource (CIR) Guidelines. The submission is separated into two sections. The first section provides comments on and suggested improvements for the Network Outage Schedule (NOS). The second section responds to the specific questions posed in AEMO s consultation document. AGL Energy Alinta Energy Intergen International Power GDF Suez LYMMCO NRG Gladstone Origin Energy TRUenergy Should you wish to discuss this submission further, please contact Hannah Heath (Origin Energy) on (02) or Chris Deague (IPR - GDF SUEZ Australia) on (03) Yours sincerely Dr Harry Schaap (on behalf of the listed generators) PO Box 5003 Alphington Victoria

2 1 Options to improve the NOS Defining the problem There is currently a lack of information in the CIR around why network outages occur, change or are cancelled. From the perspective of managing dispatch and basis risk, participants need to understand when and why an outage is occurring in order to assess its impact. These include planning and maintenance related activities such as: planned augmentation work previously noted in Annual Planning Reports; notification of why such an outage may need to be extended; regular maintenance, e.g. quarterly or semi-annual inspection; and the replacement of an aging piece of equipment. A particular challenge is identifying when or why outages change. For example, if a TNSP cancels an outage, it simply disappears from the NOS; there is no notice that flags the changed status or a requirement for the TNSP to provide a reason for the cancellation. In some cases, the only way participants could identify the cancelled outage is if they compare the current NOS to earlier versions. There are also opportunities to improve the quality control and accuracy of information in the CIR. There have been instances where incomplete information has been submitted to the NOS or where incorrect constraints have been applied to an outage. Participants act on the NOS so it is important that parties who submit data to the NOS have the correct incentives to ensure the information is accurate, timely and of high quality. Proposed Improvements TNSPs to provide more information in the NOS The 2008 Congestion Management Review (CMR) sought ways for participants to manage physical dispatch risk and financial basis risk in the NEM. The CMR identified a CIR as central to managing risks through accurate identification of the timing and duration of planned network outage by a TNSP. However, if participants cannot understand why an outage is occurring or rely on the information provided by TNSPs, it does not necessarily improve the ability to manage market risk more efficiently. Transmission outages can have a significant impact on market outcomes, both physically and financially. Participants, particularly generators, actively monitor the existing and future constraints applied to each outage to understand this impact. Understanding the elements of equipment out of service and the consequences of related constraints enables participants to optimise efficient dispatch and manage potential basis risk. Timely and accurate information is necessary to allow generators to respond effectively to planned outage events. 2

3 Having TNSPs provide additional information enables other market participants, particularly generators, to assess and respond accordingly to a proposed or changed outage. The type of information that is relevant for participants includes whether an outage is: planned, like augmentation works; scheduled maintenance, such as inspection of certain equipment; routine field work; or forced (unplanned) due to an equipment fault or degradation. This information should be provided as there is value in understanding the reason for an outage as well as the reasons why the timing of that outage has changed, been extended or been cancelled. Improving the commercial transparency and disciple on TNSPs can also help manage and potentially minimise the market impact of network outages. The National Electricity Rules (NER) already recognises the important impact outages can have on market outcomes through the Service Target Performance Incentive Scheme (STPIS). This scheme allows an increase on the Maximum Allowable Revenue for scheduling outages at times to minimise market impacts. The impact of an outage is felt not just when the outage occurs but also if and when the timing or nature of the outage changes. Improving the transparency of market information around outages can enable a more timely and effective response by key participants affected by the change. Increase regulatory scrutiny of outage information There currently appears to be a different level of regulatory oversight over public information provided by generators and TNSPs in the National Electricity Market (NEM). Both are market participants and the decisions each makes can have a material impact on the performance of the market. However, the NER subject generators to a greater level of regulatory scrutiny compared to TNSPs with respect to the information they provide to the market. As an example, NER clauses and A require generators to provide a brief verifiable and specific reason for rebids and for bids relating to changed ramp rates and plant inflexibilities. In addition, the Australian Energy Regulator has increased its monitoring and enforcement of compliant generator bids and rebids. The quality standard and scrutiny around outage information provided by TNSPs under the NER rule 3.7A appears materially lower than these provisions covering generator bids and rebids. This imbalance does not reflect the material impact that network outages can have on market outcomes. The Preferred Solution The businesses supporting this submission recommend that the CIR Guidelines prescribe more detailed information related to network outages. NER clause 3.7A sets the requirements for the TNSPs to provide information prescribed in the CIR Guidelines. The Guidelines then prescribe the details of the outage, including: The equipment affected by an outage; The planned start and end time of the outage; Whether it is secondary or in service work; and Any notes associated with the outage. 3

4 The current requirements do not specifically request information on why an outage is undertaken or why its timing has changed. While this information could be covered in the last clause, the wording is opaque, which infers that the provision of notes is voluntary and discretionary. The businesses propose that the CIR Guidelines require TNSPs to include a brief, verifiable and specific reason for each planned outage. This includes disclosing reasons for deferring or cancelling an outage. Currently, the NOS requires TNSPs to include a resubmit reason. An example of a reason is: information update. This reasoning adds limited value to the NOS and offers little practical improvement in assisting market participants to manage dispatch and basis risk. Examples of additional information on the nature or purpose of the outage that would provide value includes the classification of the outage, such as: Annual Planning Report augmentation Switching Inspection Maintenance Isolation Remedial upgrade Safety enhancements Protection Asset replacement Field work insulator replacement Other [Note: must include description] In addition to classifying the nature of the outage work, the CIR Guidelines should also require TNSPs to provide clear reasons for why the timing of outages change, irrespective of whether it moves, extends or is cancelled. Providing this additional level of detail is unlikely to be overly onerous for the TNSPs. There is also value in making the NOS available through AEMO s Market Management System (MMS) Infoserver as well as through the AEMO website. 2 Response to specific consultation questions Q1 What additional information do stakeholders consider should be included in the CIR? Provide reasoning for your proposal to assist AEMO in its assessment of outcomes and priorities. Constraint equations involve complex interactions of technical and market variables. It is important that the NEM dispatch outcomes fall within the technical network capability, and from the participant s perspective, that any cost impacts on their business are minimised. To achieve these outcomes, it is important that all participants have access to accurate and timely constraint information in a form that allows quick and easy processing. 4

5 It is in the interests of the industry collectively that participants make rational informed decisions, which in turn rely on accurate and timely information. From a participant s perspective, constraints need to be closely monitored and managed through rebidding. To ensure that participants are able to respond effectively and in a timely manner, the following additional near real time data is requested: A list updated every 5 minutes indicating which constraints are invoked, binding, violated. The list should be able to be filtered by region and constraint type to allow participants to focus on the constraints relevant to them. Ideally, the constraint list should also include the ability to select any individual constraint in the list, and request the plain English description for that particular constraint. A list updated every 5 minutes of every transmission element in the NEM, indicating the current flow (MW and MVAr or MVA), and the element rating (including the dynamic rating where applicable). The list should allow filtering by region and element type. Q2 Of the congestion related information currently published by AEMO, what information should AEMO stop publishing? The CIR contains a large amount of information which is all potentially useful and therefore none should be removed. Some of the documents and guidelines do overlap to some extent, and perhaps would benefit from some consolidation. For example, the constraint naming guidelines, formulation guidelines and implementation guidelines could be consolidated into a single volume, avoiding some of the repetition across the existing documents. Q3 Do you use the quarterly mis-pricing report (which AEMO is required to publish under NER 3.7A)? Would it be more useful if AEMO publishes the raw data in near real time to allow you to perform your own analysis? The quarterly mis-pricing report is used and provides some valuable historical insights into the market pricing outcomes. It is therefore requested that this report be maintained. The inclusion of raw data in near to real time would also be valuable to allow participants to monitor pricing outcomes in a timelier manner. Q4 Should AEMO publish the values of the dynamic line ratings in near real time? Yes (see response to question 1) Q5 Is there enough information provided in the weekly constraint changes AEMO communication? The information is adequate, but could be improved by inclusion of the plain English description of the constraint, and more information about the reasons for the changes. Q6 Is there enough information available on how AEMO monitors constraint equations? 5

6 Historical information is adequate, but more real time information could be included (see response to question 1 and 2). Q7 AEMO has provided a number of new documents (such as the Constraint Implementation Guidelines) in the CIR. Is there enough documentation on constraint processes or are there other areas AEMO can address? The quality of documentation provided by the CIR is high and is useful for market participants. However, we believe there is an opportunity to provide more real-time information on constraints. We would prefer that AEMO prioritise this ahead of increasing the volume of documentation provided. There are already examples of this from other power system operators around the world. For example, PJM and Nordpool, and we encourage AEMO to consider ways to provide more realtime information to the market on constraints. Q8 Do you find the Plain English constraint converter useful? Are there limitations on you using the converter in the WebPortal that you want to be addressed? Would it be more useful if this converter was available via another mechanism so as to enable you to implement it into your internal applications (the WebPortal option would remain)? We believe that the plain English constraint tool should be more widely available. We suggest that AEMO consider a guest login facility more appropriate for occasional users rather than everyday users. Comments are also invited on any other issues relating to the subject matter of the consultation. The CIR is a valuable area of the AEMO web-site. We suggest that it is able to be more readily accessible from a link on the main page. 6