Investigation into intervention mechanisms and system strength in the NEM

PIAC responded to the AEMC’s investigation into intervention mechanisms and system strength in the NEM consultation.

We highlight that maintaining system strength is becoming more challenging as generation mix evolves.

We make the following recommendations in response to issues raised in the consultation paper:  

• PIAC broadly agrees with the AEMC’s proposed assessment criteria, however recommend the assessment framework includes explicit reference to the value of transparency.
• The interventions framework distinguishes in principle between the treatment of reliability and security due to the non-optional nature of security
• Efficiency be treated as a more important than creating or replicating a market-based outcome
• That the reliability framework and other economic frameworks consider the trade-off between quality of service and price
• The mandatory restrictions framework be retained, but consideration is given to whether it should be amended
• The economic rationale for intervention pricing be to signal scarcity of a market traded commodity.
• Consumers, consumer advocates and market bodies have access to adequate and transparent information with respect to compensation for directed and affected participants.