Settlements residue auction rules

Rule change March 2020

In August 2019, AEMO completed a consultation on amendments to the Auction Participation Agreement (APA). The APA is Schedule 1 of the Settlement’s Residue Auction (SRA) Rules which forms part of the SRA rules under clause 3.18.3 of the NER. The amendments were made to support the implementation of the Five-Minute Settlement Rule and Global Settlement Rule. 
Clause 3.18.3(d)(1) stipulates that AEMO may amend the auction rules with the approval of the SRC and in accordance with the Rules consultation process outlined in rule 8.9. The APA is in Schedule 1 of the SRA Rules. It documents the agreement between AEMO and eligible market participants concerning the conditions of participation in SRAs, including the terms of settlement residue distribution agreements (SRDAs) for the issue of units’ subject to each quarterly auction.

The Settlement Residue Committee approved the changes to the Settlements Residue Auction rules in February 2020, which are effective from 13 March 2020.

Rule change October 2019

On 10 October 2017, in response to an NER Rule change proposal submitted by Westpac Banking Corporation (Westpac), the Australian Energy Market Commission (AEMC) made a final determination to change the NER.

This change was to enable AEMO, with the approval of the Settlements Residue Committee (SRC), to provide a platform for secondary trading of settlements residue distribution units (units). The AEMC's determination considered secondary trading will improve liquidity in units, which in turn is likely to increase interstate trade of electricity, improve risk management, and increase competition in retail and wholesale markets. Settlements Residue Auction rules were amended to take these changes into account.

The Settlement Residue Committee approved the changes to the Settlements Residue Auction rules in July 2019, and the amended auction rules were made effective on 01 October 2019 Settlement Residue Auction Rules.

• Settlements Residue Auction Rules (685 KB, pdf)

Background to previous rule changes

Rule change November 2014

AEMO consulted on the following amendments to the Settlements Residue Auction Rules:

• Removing from the auction rules the maximum number of units and proportions for each Settlement Residue Auction (SRA) directional interconnector.
• Defining in the auction rules the principles to be applied in determining the maximum number of units and proportions for each directional interconnector, and the governance structure for the approval, variation and publication of those values.
• Removing references to jurisdictional derogations.
• Modifying the definition of the start of the auction bidding period.
• Rephrasing the timing for auction expense fees notification. 

Rule change March 2014

In late 2013 and early 2014, AEMO consulted on the following minor amendments to the Settlements Residue Auction Rules:

• Including the method for calculating auction expense fees, and updating the formula to reflect that these are calculated over three years.
• Describing the process AEMO uses to reconcile auction expense fees.
• Allowing auction dates to be changed either earlier or later.
• Removing the requirement to publish several notifications on NEMNET. 

Rule change May 2010

The Australian Energy Market Commission (AEMC) published its final report of the Congestion Management Review on 16 June 2008. The report recommended changing the design of Settlements Residue Auctions (SRA), so auction units would be available up to three years in advance.

During late 2009, AEMO undertook a full consultation on amendments to the SRA Auction Rules, to facilitate auctioning of units up to three years in advance. The amended Rules would be due to come into force on 1 May 2010 in time for the June 2010 auction, where for the first time units would auctioned three years in advance. In addition, AEMO introduced a number of miscellaneous amendments to reflect current auction practices.

The miscellaneous changes included:

• Removing the concept of concurrent auctions, which was no longer required with inter-temporal linking.
• Removing the option for accelerated auctions, as this was no longer considered necessary.
• Correcting a number of Rule references.
• Removing the remaining references to Snowy interconnectors. 

For further information on these documents, please contact the AEMO Information and Support Hub.