Clause 4.16.3 of the Market Rules requires the Economic Regulation Authority (ERA) to develop a Market Procedure documenting the methodology that AEMO must use and the process that AEMO must follow in determining the Benchmark Reserve Capacity Price (BRCP).
Clause 4.16.9 of the Market Rules requires the ERA to review the Market Procedure referred to in clause 4.16.3 at least once every five year period, and to either submit a Rule Change Proposal or initiate a Procedure Change Process, as the case may be, to implement any recommended changes from the review.
At the Market Advisory Committee (MAC) meeting held on 28 July 2020, the MAC agreed to establish the BRCP Working Group to assist the ERA on its review of the Market Procedure under clause 4.16.19.
The BRCP Working Group’s scope of work is to assist the ERA with its:
(1) review of the calculation method for the weighted average cost of capital (WACC) included in the BRCP and the underlying variables in the WACC; and
(2) assessment of cost items to be included in the calculation of the BRCP and the estimation method for these cost items.
For the purposes of item (2), the intent is to develop a framework to identify cost items and to assess the suitability of the current Market Procedure against the framework.
The ERA will provide secretariat support for the BRCP Working Group. The only standing member of the Working Group is the Chair appointed by the ERA. The current chair is Sara O’Connor.
As part of its review of the Market Procedure, the ERA published the draft procedure change proposal on 15 September 2020 on the ERA website. The ERA invites comments on this paper by 4:00pm WST Wednesday 14 October 2020.
Terms of Reference
The Terms of Reference for the Working Group is available below.
Terms of Reference [113kB]
Upcoming Meeting Dates
6 October 2020