The Market Procedure: Maximum Reserve Capacity Price is a Market Procedure which states the method that the Australian Energy Market Operator (AEMO) must use in determining the Benchmark Reserve Capacity Price (BRCP) in each Reserve Capacity Cycle.
Under the Wholesale Electricity Market Rules, the ERA is responsible for reviewing the Market Procedure for the calculation of the BRCP at least once every five years.
After consulting with the Market Advisory Committee Working Group established for the review of the Market Procedure, the ERA limited the scope of the review to the calculation of the cost of capital in the Market Procedure. Limiting the scope allows the ERA to fast-track the amendment process, with the aim to publish a revised Market Procedure in time for AEMO to apply to the calculation of the BRCP this year for the 2023/24 Reserve Capacity Cycle.
On 15 September 2020, the ERA published the procedure change proposal and invited comments on the proposed amendments by 14 October 2020. The ERA received one submission.
On 6 November 2020, the ERA published the procedure change report outlining the reasons for the amendments to the Market Procedure, a summary of stakeholder feedback and the ERA’s response to the feedback. The amendments will improve the calculation of the weighted average cost of capital that is used to calculate the BRCP.
The ERA has completed its review of the BRCP Market Procedure as required by clause 4.16.9 of the Wholesale Electricity Market Rules.
The amended Market Procedure will commence from 9 November 2020 and is available on the ERA website.
Documentation for this procedure change is below.
