• Improving Reserve Capacity pricing signals

    Overview

    The Public Utilities Office is undertaking a review to develop advice for the Minister for Energy on improving reserve capacity pricing arrangements in the Wholesale Electricity Market. This advice will examine the suitability of implementing an auction to determine capacity pricing, as well as other appropriate alternative pricing arrangements.

    Any new capacity pricing arrangements to be considered must be fit-for-purpose, cost effective, and based on a more dynamic and responsive pricing mechanism to ensure electricity consumers do not pay more than necessary for sufficient capacity to meet reliability requirements for the electricity system.

    Following extensive industry consultation, the Public Utilities Office will provide its advice to the Minister for Energy in September 2018.  

    Consultation

    The Public Utilities Office has published a consultation paper on alternative approaches to a capacity auction that could be used to achieve a more responsive pricing of capacity resources. The consultation paper is available below. Options presented in this consultation paper are informed by an assessment of capacity market mechanisms in North America and Europe.

    Submissions on the consultation paper are invited by 4 May 2018. 

    Following further consideration of the capacity pricing options and ongoing engagement with stakeholders, the Public Utilities Office anticipates releasing its draft Recommendations Report in July 2018 for consultation. Once stakeholder feedback has been received, the Public Utilities Office will finalise its Recommendations Report to the Minister for Energy in September 2018.

    Last reviewed: 9 April 2018

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