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.
The ERA published its draft determination of the energy price limits on 24 November 2021 and invited submissions from interested parties by 31 December 2021. The ERA received feedback from Synergy and Alinta Energy. The ERA published its final determination on 24 January 2022 outlining the revised values of the energy price limits.