In the Wholesale Electricity Market (WEM), participants offer energy and ancillary services to meet real-time demand for energy. Offers into the day-ahead Short-Term Energy Market (STEM) and intra-day balancing market are based on the cost of supply and are subject to a set of energy price limits to mitigate the exercise of market power.
The energy price limits comprise:
• The maximum STEM price, which applies to the generation of electricity from all facilities except those using distillate as the fuel source.
• The alternative maximum STEM price, which applies to generators that use distillate as a fuel source.
• The minimum STEM price, which is currently fixed at negative $1,000/MWh and must be reviewed by the ERA under a separate obligation in the WEM Rules.
From 1 July 2021, the ERA must annually review the appropriateness of the values of the maximum STEM price and the alternative maximum STEM price. This review will include public consultation on any revised values which will inform the ERA’s final determination. Any revised values of the Energy Price Limits will take effect on a date specified by the Australian Energy Market Operator and will be published on its website.
As part of its Energy Transformation Strategy, the State Government is currently amending the WEM Rules to give effect to the new market design that is scheduled to take effect from 1 October 2023. This includes changes to the existing energy price limits framework. More information is available on the State Government’s website.
The ERA published its draft determination of the energy price limits on 2 December 2022. The ERA received one submission in response to the draft determination which is available below. After considering stakeholder feedback, the ERA published its final determination on 23 January 2023.
The revised energy price limits apply from 1 February 2023 until the commencement of the new market design on 1 October 2023.