A market power mitigation framework commenced with the new Wholesale Electricity Market (WEM) on 1 October 2023. Under that framework the Economic Regulation Authority (ERA) must conduct a portfolio assessments and market power tests at regular, specified timeframes throughout the year. The first of the two forms of assessment assigns facilities to portfolios based on registration, ownership, or operational control. The second form, constrained portfolio assessment, is based on those facilities subject to a binding network constraint during a Rolling Test Window. Following identification of portfolios and constrained portfolios a materiality threshold is then applied (the market power test).
Allocation to a material portfolio or material constrained portfolio places governance obligations on facilities within material portfolios to maintain records. The process also places obligation on the ERA to monitor offers into the real time market from material portfolios. The ERA’s monitoring and surveillance activities are not confined to material portfolios.
The ERA is guided by the WEM Procedure: Portfolio Determination when completing this work.
Portfolios
The ERA must identify each Portfolio operating in the Wholesale Electricity Market (WEM) by 1 October each year, in accordance with the WEM Procedure referred to in ESM Rule 2.16D.15 (ESM Rule 2.16B.1(a)). The ERA must within 10 Business Days of identifying each Portfolio, publish a list on its website specifying the name of each Registered Facility within each identified Portfolio (ESM Rule 2.16B.1(b)).
Constrained Portfolios
The ERA must identify Constrained Portfolios and apply a test to determine those Market Participants with facilities that are part of Material Constrained Portfolios. The ERA publishes this determination after the end of each three-month period (defined in the Electricity System and Market Rules as a Rolling Test Window) with each determination replacing the previous. Market Participants with facilities that are part of Material Constrained Portfolios must ensure that they comply with their obligations, including record-keeping obligations on offer price construction.