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AEMO’s National Energy Market Emergency Powers

During certain market events, the Australian Emergency Market Operator (AEMO) exercises its emergency powers to ensure the safe, reliable and secure supply of electricity is maintained. These powers are generally used as a last resort to avoid blackouts and maintain power system security.

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Operation of the National Energy Market

The National Electricity Rules (NER) govern the operation of the National Energy Market (NEM). Under the NER, AEMO is responsible for ensuring the NEM is operated in a safe, secure and reliable manner.

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Reliable energy supply

When AEMO exercises its emergency powers to ensure the safe, secure, and reliable supply of energy, there are different costs associated with intervention actions, such as:

RERT is one of the intervention mechanisms AEMO may utilise during periods in which the supply and demand balance is tight, usually because of generation or networks constraints and extreme weather events.

It allows AEMO to contract for emergency reserves; maintaining a panel of RERT providers who can provide short and medium-notice RERT reserves if required.

The RERT reserve is typically produced by one or more participants either:

Costs for energy, ancillary services and other compensable services provided by market participants, as directed by AEMO. AEMO can issue ‘directions’ to registered participants to take relevant actions to maintain or restore power system security or reliability.

Relevant actions include, but are not limited to:

  • Commencing operation or maintaining, increasing, or reducing active or reactive power output and supply
  • Shutting down or varying operation
  • Switching off, or re-routing, a generator
  • Calling equipment into service
  • Taking equipment out of service.

    Registered Market Participants must use its reasonable endeavours to comply with AEMO’s directions. After a relevant direction has been issued, AEMO will determine the service or service(s) that were provided as part of the direction. Directions compensation costs are determined by AEMO.

    Find out more:

    AEMO - Market Event Reports

Costs not covered by market suspension pricing when the market was suspended by AEMO. There are a number of reasons for which AEMO may suspend the spot market in a region as set out in NER clause 3.14, which include:

  • AEMO determines that it has become impossible to operate the spot market in accordance with the provisions of the NER
  • The power system in the region has collapsed to a black system (generally when 60%+ of the forecast load in a NEM region is lost)
  • AEMO has been directed by a participating jurisdiction to suspend the market following declaration by that jurisdiction of a state of emergency
  • The inability to operate the spot market due to IT failures.

    Market suspension compensation costs are determined by AEMO.

Find out more:

AEMO – Emergency Management

Guide to Market Suspension in the NEM

Costs during periods when spot market prices were affected by the administered price cap. The administered price provisions are part of the NEM safety net and are designed to protect and sustain NEM trading and customers from extended high price periods. Should an administered pricing period occur, where an administered pricing cap (APC) or administered pricing floor is applied, market participants may claim compensation for losses incurred during the period, referred to as administered pricing compensation.

The compensation has two components (direct costs and opportunity costs) and is designed to provide incentive to participants to supply services while administered pricing is in place.

The process for determining administered pricing compensation is run independently by the Australian Energy Market Commission (AEMC) and costs are passed on to Retailers, such as AGL, through the AEMO NEM Settlement process.

Find out more:

AEMC – Administered Pricing Compensation Claims

AEMO – Guide to Administered Pricing, Briefing Paper

For costs during periods when AEMO was required to intervene on technical characteristics of the power system such as frequency and voltage.
AEMO manages key technical characteristics of the power system, including standards for frequency, voltage, network loading and system restart processes. It does this using three major categories of Ancillary Services:

  • Frequency Control Ancillary Services (FCAS)
  • Network Support Control Ancillary Services (NSCAS)
  • System Restart Ancillary Services (SRAS).

AEMO uses FCAS to help maintain the frequency of the electrical system within the required operating band. Per the NEM frequency standards, the frequency of the electrical system must be maintained close to fifty cycles per second (50 Hertz). FCAS costs are determined by AEMO.

Find out more:

AEMO - Ancillary Services.

Recent updates

Please visit the following websites for more information on recent AEMO intervention events and market charges:  

Frequently asked questions 

Under the National Energy Rules, AEMO is provided with powers and mechanisms to protect the security, safety and continuity of the National Electricity Market (NEM).

When AEMO exercises its powers, costs are incurred. As these costs are associated with the operation of the NEM, they are Market Charges.

Yes. When AEMO exercises its powers to protect the security, safety and continuity of the National Electricity Market, costs are inevitably incurred.

The following costs are assessed by AEMO:

  • Reliability and Emergency Reserve Trader payments
  • Directions compensation
  • Frequency Control Ancillary Services costs
  • Suspension pricing compensation.

    The following costs are assessed by the AEMC:

  • Administered pricing compensation.

AEMO recovers costs incurred from Market Participants (i.e., retailers) using their published procedures, with the apportionment of costs to Market Participants, including AGL, being generally based on their demand from the National Electricity Market (NEM). It passes the attributed costs to the retailer through the NEM settlement process, based on the NEM settlement calendar.

The NEM settlement calendar operates in arrears, and any costs apportioned costs to AGL may be progressively received and/or later revised. Revisions are usually driven by metering, data, or cost corrections/improvements. The result of this is that charges billed to customers by AGL based on costs from AEMO are also subject to revision or adjustment.

AGL apportions costs across its various customer segments. The apportioned charges are generally bundled with other charges on customer bills and not separately identified. In response to larger costs received, itemised charges may be billed to relevant commercial and industrial customers (typically those who consumed electricity in the region at the relevant time).

Noting that:

  • The ‘time of the event’ referenced above may not exactly align to AEMO’s published time of the event depending on the type and nature of the event and the data that is reasonably available.
  • In all instances AGL apportions and bills these costs to customers without mark-up or margin.

Yes. Our contract with you, at clause 3.3, says that you agree to pay to AGL certain charges. These include ‘Market Charges’. As the costs of AEMO exercising its emergency powers are associated with the operation of the National Electricity Market by AEMO, it is a Market Charge.

The charges AGL bills in relation to each market event may be subject to revision or adjustment and AGL also reserves the right to recover further costs incurred by AGL in relation to the event even if you closed your account after the event. In this circumstance your final bill from AGL may be revised, or you may be separately billed for the charges.

AGL can't comment on the methods other retailers use to calculate and charge market and ancillary charges. 

If you have any questions, we’ll be happy to help. To get in touch, please email or contact the Business Customer Service Team on 1300 793 477 between 8.30am and 5.30pm AET, Monday to Friday.