Dear Ms Anna Collyer, Chair of the Australian Energy Market Commission (AEMC)
The Institute for Energy Economics and Financial Analysis (IEEFA) welcomes the opportunity to respond to the AEMC Draft Rule Determination – National Electricity Amendment (Extension of the Application of the IRM to the RRO) Rule.
IEEFA has reviewed the draft rule determination to extend the application of the interim reliability measure (IRM) to the retailer reliability obligation (RRO) until 30 June 2028.
IEEFA finds there is not sufficient evidence that consumers are willing to pay for this measure. After undertaking an extensive exercise, the Reliability Panel found that the level of reliability stipulated by the IRM does not reflect customer willingness to pay for reliability.
“The Panel’s analysis indicates the IRM, at 0.0006% expected USE, is significantly tighter than a level of reliability consistent with consumer willingness to pay for reliability. The Panel, therefore, does not consider the IRM is a suitable level for the NEM reliability standard.”
The Reliability Panel also found that the cost of “achieving an IRM level of reliability… is likely to be in the order of $100 million a year”.