Market Monitoring in the Australian Electricity Market n Brian Spalding n General Manager Power Exchange

Market Monitoring nDivision of Responsibility Ù Regulatory structure ÞNEMMCO and NECA nNEMMCO ÞInvestigations ÞData to NECA nNECA ÞSurveillance and Monitoring Strategy ÞReporting nEnforcement ÝNational Electricity Tribunal

National Market Regulation Code Participants Generators Market Customers(Retailers) Participant End Use Customers Network Operators Traders National Electricity Law NECA National Market Code ACCC ASIC NEMMCO 5 State Regulators Elect. Tribunal (Competition - Trade Practices) (Financial Markets) (Access & regulated activities) (Enforcement - Disputes)

Weekly Average Price Averages to 26 Aug 2000 NSW $28.77 Qld $47.05 SA $56.12 Snwy $28.69 Vic $28.45

Market Information n Advance of trading n Pre-dispatch, and PASA, Statement of Opportunities n Progressive n Regional demands/prices - each 5 minutes n Next Day n Scheduled generation and all bids

Predispatch, PASA & SOO 0 day 1 week 1 year 1 year 2 Medium Term PASA ST PASA Predispatch Schedule Stmt of Ops

Division of Responsibility n Under the National Electricity Code, the primary responsibility for market monitoring and surveillance lays with the National Electricity Code Administrator (NECA) n NEMMCO’s role is limited to providing data to NECA and publicly reporting on system incidents that have potential to impact on system security

NEMMCO’s Role nConduct reviews of significant operating incidents nto assess the adequacy and response of facilities or services nactions taken to restore or maintain power system security. nReview must be made available to Code Participants and the public. nProvide data to NECA under a protocol re-bidding activity and reasons dispatch compliance routine reports and data requirements

NECA’s Role n NECA’s objective is to operate a light-handed but effective regulatory regime that emphasises voluntary Code compliance. However, NECA will move swiftly and appropriately in response to evidence that any market participants are not acting in good faith.

NECA’s Role nMonitoring and Surveillance ÝMonitor and respond to potential Code breaches through continuous and targeted monitoring of market participants and systems  routine review of market operations using reports and data provided by NEMMCO;  random targeting of specific Code requirements; and  the monitoring and assessment of power traders and their ability to comply with the Code.

NECA’s Role nMonitoring and Surveillance (continued) ÝMonitors variations between forecast and actual spot prices ÝDetermine reasons for deviations ÝWhere breach of TPA possible report to the Australian Competition and Consumer Commission (ACCC). This may lead to further action by the ACCC under the Trade Practices Act.

NECA’s Role nInvestigations market events or practices allegations made by other parties; and referrals by the ACCC under a memorandum of understanding (MOU) with NECA. nNECA will report incidents where it finds that significant variations are caused by activities that in its opinion are inconsistent with the objectives of the market

NECA Investigations

Enforcement nThe National Electricity Law provides for regulations, to determine the category (A, B, C) into which specific breaches of the Code fall. nThe National Electricity Tribunal has been established by legislation

Enforcement nThe functions of the Tribunal are to: Ýreview decisions by NEMMCO or NECA which are identified as reviewable decisions under the Code and the National Electricity Law; Ýact as a court of appeal where NECA imposes a category A civil penalty on a Code participant; and Ýdetermine applications by NECA alleging breaches of the Code by Code participants.

Results n No breaches of Code progressed n No actions under the Trade Practices Act n NECA has attempted to introduce a code of ethics n Stricter rules proposed on re-bidding n NECA has issued some general “be careful” letters n Some concerns over market power

Market Monitoring in the Australian Electricity Market n Brian Spalding n General Manager Power Exchange