❓ A parliamentary question addresses concerns about the design and operation of Western Australia's Wholesale Energy Market, particularly regarding the capacity market, reserve margins, and penalties for plant unavailability. The Minister acknowledges the concerns and outlines existing mechanisms and future considerations.
AnsweredQoN 1657Legislative Assembly
QuestionView source ↗
With reference to the recent report produced by the Energy Reform Implementation Group regarding the electricity Industry, and in particular the section on Western Australia’s Wholesale Energy Market, I ask –
(1) Is the Minister aware of the concerns expressed with regard to the design of the capacity market?
(a) What is being done to respond to these concerns?
(2) Does the Minister agree with the suggestion in the report that capacity markets operate more effectively with a ‘pay for performance measure’ to ensure availability at the time it is most needed?
(3) Why is the setting of the reserve margin done administratively rather than by the use of market forces?
(4) Will the Minister advise the penalty associated with a plant not being available at critical times?
(1) Is the Minister aware of the concerns expressed with regard to the design of the capacity market?
(a) What is being done to respond to these concerns?
(2) Does the Minister agree with the suggestion in the report that capacity markets operate more effectively with a ‘pay for performance measure’ to ensure availability at the time it is most needed?
(3) Why is the setting of the reserve margin done administratively rather than by the use of market forces?
(4) Will the Minister advise the penalty associated with a plant not being available at critical times?
AnswerView source ↗
Answered
1 January 2007
Responded by
Minister for Energy
Response time
32 days
(1) The Energy Reform Implementation Group has acknowledged the material progress made in the Wholesale Electricity Market in Western Australia. It also notes that, at an appropriate time, it may be worth considering refining the workings of the capacity market to make it more market oriented. The capacity arrangements are an important component of the electricity market in Western Australia and were developed following extensive consultation and input from stakeholders in Western Australia. (a)Whilst premature change would be inappropriate I will refer the ERIG report's comments to the Market Advisory Committee for its consideration in 2007. I would also note that the Office of Energy is providing a submission responding to the ERIG report and addressing the issues raised in the report from a Western Australian perspective. (2) I agree with ERIG's view that capacity markets operate more efficiently with a 'pay for performance' measure to ensure availability at the time it is most needed. The Western Australian Wholesale Electricity Market already incorporates this feature. ·Market Generators must certify their generation facilities with the Independent Market Operator ("IMO") to obtain Capacity Credits under the Rules, and once certified, are obliged to make their nominated capacity available to the market; ·Generation plant which has Capacity Credits must be subject to central planning of maintenance outages; ·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
(a)Whilst premature change would be inappropriate I will refer the ERIG report's comments to the Market Advisory Committee for its consideration in 2007. I would also note that the Office of Energy is providing a submission responding to the ERIG report and addressing the issues raised in the report from a Western Australian perspective. (2) I agree with ERIG's view that capacity markets operate more efficiently with a 'pay for performance' measure to ensure availability at the time it is most needed. The Western Australian Wholesale Electricity Market already incorporates this feature. ·Market Generators must certify their generation facilities with the Independent Market Operator ("IMO") to obtain Capacity Credits under the Rules, and once certified, are obliged to make their nominated capacity available to the market; ·Generation plant which has Capacity Credits must be subject to central planning of maintenance outages; ·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
(2) I agree with ERIG's view that capacity markets operate more efficiently with a 'pay for performance' measure to ensure availability at the time it is most needed. The Western Australian Wholesale Electricity Market already incorporates this feature. ·Market Generators must certify their generation facilities with the Independent Market Operator ("IMO") to obtain Capacity Credits under the Rules, and once certified, are obliged to make their nominated capacity available to the market; ·Generation plant which has Capacity Credits must be subject to central planning of maintenance outages; ·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
·Market Generators must certify their generation facilities with the Independent Market Operator ("IMO") to obtain Capacity Credits under the Rules, and once certified, are obliged to make their nominated capacity available to the market; ·Generation plant which has Capacity Credits must be subject to central planning of maintenance outages; ·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
·Generation plant which has Capacity Credits must be subject to central planning of maintenance outages; ·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
(3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
(4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
(a)Whilst premature change would be inappropriate I will refer the ERIG report's comments to the Market Advisory Committee for its consideration in 2007. I would also note that the Office of Energy is providing a submission responding to the ERIG report and addressing the issues raised in the report from a Western Australian perspective. (2) I agree with ERIG's view that capacity markets operate more efficiently with a 'pay for performance' measure to ensure availability at the time it is most needed. The Western Australian Wholesale Electricity Market already incorporates this feature. ·Market Generators must certify their generation facilities with the Independent Market Operator ("IMO") to obtain Capacity Credits under the Rules, and once certified, are obliged to make their nominated capacity available to the market; ·Generation plant which has Capacity Credits must be subject to central planning of maintenance outages; ·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
(2) I agree with ERIG's view that capacity markets operate more efficiently with a 'pay for performance' measure to ensure availability at the time it is most needed. The Western Australian Wholesale Electricity Market already incorporates this feature. ·Market Generators must certify their generation facilities with the Independent Market Operator ("IMO") to obtain Capacity Credits under the Rules, and once certified, are obliged to make their nominated capacity available to the market; ·Generation plant which has Capacity Credits must be subject to central planning of maintenance outages; ·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
·Market Generators must certify their generation facilities with the Independent Market Operator ("IMO") to obtain Capacity Credits under the Rules, and once certified, are obliged to make their nominated capacity available to the market; ·Generation plant which has Capacity Credits must be subject to central planning of maintenance outages; ·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
·Generation plant which has Capacity Credits must be subject to central planning of maintenance outages; ·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
·The IMO tests generation facilities to ensure that the facilities can provide capacity as has been nominated by their owners. Generators will be stripped of Capacity Credits for facilities that fail such tests; and ·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
·Market Generators will be subject to penalties if their generation facilities are not available when called upon. (3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
(3) Given the lack of interconnection with other jurisdictional electricity markets it is important that the Western Australian Wholesale Electricity Market delivers sufficient capacity to provide for reliability at all times. Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
Relying purely on market forces to determine the reserve capacity margin may be appropriate for the interconnected National Electricity Market, but it is not considered appropriate for the isolated Western Australian Wholesale Electricity Market. Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
Centralised planning of the system's generation capacity requirements is a prudent measure to achieve appropriate levels of reliability. (4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
(4) The penalty for plant not being available at critical times is specified in clause 4.26 of the Wholesale Electricity Market Rules, and is dependant on the timing and duration of unplanned plant outages. Penalties are highest during the hot summer months when all plant must be available to reliably serve load.
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