On 6 November 2024, the AER published proposed amendments to the transmission service target performance incentive scheme (STPIS) framework for consultation. STPIS has been under increasing scrutiny from across the energy sector as the energy transition affects network performance and operation. There are a number of interesting amendments proposed as part of the AER’s review; of note is the proposed suspension of the market impact component (MIC) of STPIS.
The MIC provided TNSPs with financial incentives to schedule planned outages at times of least disruption on wholesale market prices. Significant changes in generation across the NEM as part of the energy transition have contributed to a significant increase in the number of MIC events over the past five years. Now most TNSPs face maximum penalties regardless of their actions, which is misaligned to the original basis of the framework to incentivise more optimal decisions. This affects both TNSPs’ decision-making, but, consequently, wholesale market outcomes for the NEM.
As stakeholders have raised concerns that MIC is no longer fit for purpose, the AER has explored a number of alternative options, but is now proposing to suspend the MIC and collect further data before determining an alternative approach. The AER is also exploring the introduction of conduct obligations for TNSPs regarding scheduled outages.
The AER is seeking industry feedback on these amendments until 3 February 2025.
Link: https://lnkd.in/dS78XSSW
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