AEMC announces 6-month delay on ruling on Negawatt Dispatch Mechanism

I believe that it was today (Thu 5th Dec 2019) when the AEMC’s final determination on what we’ve been calling the “Centralised Negawatt Dispatch Mechanism” was due.

Instead (today) we note that the AEMC site here includes the following note:

On 5 December 2019 the Commission extended the time for making a final determination until 11 June 2020 under section 107 of the National Electricity Law (NEL) and section 266 of the National Electricity Retail Law (NERL). The Commission expects to release a second draft determination in March 2020.

This extension followed the provision of supplementary information by the market operator, AEMO, on implementing the proposed mechanism.

This brief timeline (based on my own understanding) might help:

Reverse Chronological
Several years ahead? AEMO’s letter (of 25th Nov 2019) makes clear that their view is that the end-goal is a (real) two-sided market.  We’d concur with this view.

AEMO suggests in their letter that it might be a “timely” introduction – whether this means several years ahead (or more, or less) remains to be seen.


(a busy time, with the cut-over to 5-minute settlement from 1 July 2021)

Currently noted (in AEMO letter) as start date for some form of soft interim arrangement – their letter states:

Simplify the existing design by enabling demand response to access the market without being scheduled with the aim to implement by mid-2021. We would make clear these arrangements are transitional with the intent of moving to scheduling arrangements under the two-sided market design

With respect to the “without being scheduled” bit, we wonder what AEMO has in mind here – perhaps something like currently used for the RERT, which is essentially outside of the NEMDE dispatch process.

With respect to the “make clear these arrangements are transitional” bit, we’d certainly support that (as noted before) in order to ensure no resistance to removal of interim arrangements when we’re ready for a two-sided market.

Thu 11 June 2020 Now is AEMC’s revised date for a final ruling on encouraging Demand Response in dispatch.
March 2020 Now is when AEMC expects to publish draft Rule Change
Thu 5th Dec 2019
This was (I think) when the final rule was due – but instead we see a 6-month delay (which suggests to me a pretty substantial rethink of the direction taken)
Thu 14th Nov 2019 AEMC published discussion paper on two-sided market.
Mon, 21st Oct 2019 We published an article on WattClarity, “All aboard the Negawatt Express … but where are we really headed?” that raised some questions about how what was proposed at the time would lead into a (true) two-sided market.
Thu 18th July 2019 AEMC issued draft ruling calling for what we view as a Centralized Negawatt Dispatch Mechanism.
Tue, 5th March 2019 We published an article on WattClarity, “Some thoughts about Demand Response, in parallel with AEMC deliberations” that raised concerns about what was proposed by the proponents.
Thu, 15th Nov 2018 AEMC invites submissions on 3 different proposals for ‘Negawatts’ to be included in the centralised dispatch (and price setting) process.
24 Nov 2016 On 24 November 2016 the Australian Energy Market Commission made a final rule, which is a more preferable rule, to create a new type of market participant who can do deals with energy users to offer demand response as a tool to help maintain power system security.

The final rule provides for a new type of market participant – a market ancillary service provider – to offer customers’ loads into the frequency control ancillary services (FCAS) markets.

Thu, 29th Sept 2016 As part of the prior Rule Change process conducted by the AEMC, consultants (Oakley Greenwood) found a higher level of demand response operating in the NEM than some might have been thinking.
Thu 1st Sept 2016 AEMC issues draft determination of a more preferable rule change to improve competition in the provision of ancillary services that will help maintain power system security.
25th March 2015 In a prior rule change process the COAG Energy Council submitted a rule change request which the AEMC took to calling “Demand Response Mechanism and Ancillary Services Unbundling”  
around 2002 It was around this time (back in the early days of the NEM) that we started serving our first Demand Response customers – large energy users operating with spot exposure in their retail contracts as explained in more detail here.

We will watch with interest as this continues to evolve…

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