Submission to AEMC 2026 Reliability Standard and Settings Review

The JEC made a submission to the Australian Energy market Commission (AEMC) 2026 Reliability Standard and Settings Review.

We argued that the reliability regime must be grounded in the Australian Energy Regulator’s (AER) Values of Customer Reliability (VCR). Failure to do this will cause consumers to pay more than they would prefer to for the marginal unit of reliability. This is the current situations; for many years now, the negative impact on consumers in recent years of the costs of avoiding outages have been far greater than the negative impacts of any outages themselves.

We all proposed three practical changes to the practice of the panel in deriving the appropriate levels for the market settings:

1. Changing the modelled entrant from a gas peaking generator to a wholesale battery, demand response project, or virtual power plant. All of these are more likely to actually enter the market during the period modelled, and all require lower levels of incentive to enter, and so hold the prospect of enabling the Commission to lower the market settings from their current levels without expected reliability outcomes falling below the standard.
2. Switching from forcing a reliability gap by removing existing generators to identifying future gaps by removing anticipated entering generators or storage providers. This may reduce the inflationary bias of the forced gap approach.
3. Abandoning the practice of deriving the appropriate market settings by assuming that reliability outcomes are produced by the market settings alone, that is, ignoring the many other mechanisms within the reliability regime, many of which have been added in recent years. This was initially selected as an approach in the name of redundancy. While it may or may not have been appropriate then, given the growth of tools contributing to reliability outcomes in recent years, the impact of the practice now can only be to force consumers to pay more for reliability outcomes than they have indicated they would prefer to in the VCR.