MANDATORY RESTRICTION OFFERS

Transcription

1 PREPARED BY: PROCEDURE TYPE: DOCUMENT REFERENCE: FINAL APPROVER: Systems Capability System Operating Procedure SO_OP_3713 Damien Sanford DOC. VERSION: 8 DATE: 30 November 2015 This document is current to version 73 of the National Electricity Rules Am,t,ol on Eneroy 1~.o, keto pe, ~tor Ltd ABN ~4 072 o,:, info@oemo.cotr.ou NEW sou-h WAlfS QU:ENSLAND SOUTH AUSTRALIA \1CTORIA.. usrrau.",n CAPIT.",L TERRITORY

2 History Version Date Author Checker Endorser Approver Comments 8 19/11/2015 H Singh A Dunn 7 18/11/2011 T van der Walt J Zhai 6 01/07/2009 A Stephens M Hoarau P Ryan P Ryan D Sanford Transferred content to new template Updated Figure 2 Section 6.1 edit changed SM to NEM RO R Rigoni H Gorniak Updated NEMMCO and JC references and Included semi-scheduled generation and intraregional constraints in section 3, added disclaimer and converted to external procedure format. Added MR timeline. Updated MRS Regional Thresholds table P Uribe C Brownlee Change to AEMO document. Next Review Next Review Date 01/07/2016 Periodic Review Type Doc Ref: SO_OP_ V8 30 November 2015 Page 2 of 21

3 Important Notice This document has been prepared by AEMO as required by clause of the National Electricity Rules (Rules), and has effect only for the purposes set out in the Rules. The Rules and the National Electricity Law (Law) prevail over this document to the extent of any inconsistency. No Reliance or warranty This document might also contain information which is provided for explanatory purposes. That information does not constitute legal or business advice, and should not be relied on as a substitute for obtaining detailed advice about the Law, the Rules, or any other applicable laws, procedures or policies. While AEMO has made every effort to ensure the quality of the information in this document, neither AEMO, nor any of its employees, agents and consultants make any representation or warranty as to the accuracy, reliability, completeness, currency or suitability for particular purposes of that information. Limitation of liability To the maximum extent permitted by law, AEMO and its advisers, consultants and other contributors to this document (or their respective associated companies, businesses, partners, directors, officers or employees) are not liable (whether by reason of negligence or otherwise) for any errors, omissions, defects or misrepresentations in this document, or for any loss or damage suffered by persons who use or rely on the information in it Australian Energy Market Operator Limited. The material in this publication may be used in accordance with the copyright permissions on AEMO s website Doc Ref: SO_OP_ V8 30 November 2015 Page 3 of 21

4 Contents 1 Introduction Purpose Application Related Policies and Procedures Principles Intra-regional constraint Semi-scheduled generation Mandatory Restriction Offer Dispatch Process Initiation of the Mandatory Restriction Process Mandatory Restriction Schedule (MRS) MR offer submission Ineligibility of generating units affected by binding network constraints MR Offer Dispatch Submit accepted MR Offers to MMS Load Forecasting During a Mandatory Restriction Period Monitoring MR Offer Dispatch Review of MRS Process for Meeting the Amended MRS Changes to Plant Availability and MR Capacity MR Offer Settlements Appendix A Validation Rules for MR Offers Figures Figure 1 Mandatory restrictions offer dispatch process Figure 2 Mandatory Restriction Timeline Figure 3 Revision of Mandatory Restriction Schedule Figure 4 Plant availability reductions during a MR period Figure 5 MR offer settlements Tables Table 1 Glossary... 6 Table 2 Related policies and procedures... 8 Doc Ref: SO_OP_ V8 30 November 2015 Page 4 of 21

5 Table 3 MRS Regional Thresholds Doc Ref: SO_OP_ V8 30 November 2015 Page 5 of 21

6 Glossary a) In this document, a word or phrase in this style has the same meaning as given to that term in the NER. b) In this document, capitalised words or phrases or acronyms have the meaning set out opposite those words, phrases, or acronyms in the table below. c) Unless the context otherwise requires, this document will be interpreted in accordance with Schedule 2 of the National Electricity Law. Table 1 Glossary Term NER MR Voluntary Reductions MRS DUID Deducted MR Capacity MMS MR event MR offer validation MR offer cut off time National Electricity Rules Meaning Mandatory restrictions. The NER definition of mandatory restrictions is Restrictions imposed by a participating jurisdiction by a relevant law, other than the Rules, on the use of electricity in a region. In the event of supply scarcity situations, jurisdictions may request the public through the media to reduce the consumption of electricity voluntarily with no enforcement using any specific legislation. The reduction of electricity consumption achieved using such requests are treated as voluntary reductions. Mandatory Restriction schedule is a half-hourly schedule approved by Jurisdictional System Security Coordinator, giving the difference between the forecast load for the region without taking into account the impact of MR (known as unrestricted load profile) and the forecast load taking into account the impact of MR (known as the restricted load profile). Given that conditions can change with time, the MRS requires updating from time to time by AEMO in conjunction with the Jurisdictional System Security Coordinator. Dispatchable unit identifier Deducted MR Capacity is an amount by which the original accepted MR offer capacity has been subsequently reduced by AEMO on the request of the participant, due to plant problems experienced, after the MR offers have been dispatched. Market management systems Whenever jurisdictions declare that the mandatory restrictions will be imposed, for the purpose of following MR offer processes as required by NER 3.12A, an MR event has to be created in the MMS, with an MR offer cut off time. Separate MR events have to be created for each of the regions where MR will be imposed. The duration of the MR event could be as long as the trading day or could be a part of the trading day. The duration of the MR period will be determined by the duration of the MR schedule. The MR offer is a component of energy market offers and in the process of offer validation, MR component of the offer is also validated. Refer to Appendix A - Validation rules for MR offers, for the validation rules of MR component of energy offers. All initial MR offers are to be submitted before the MR offer cut off time. An initial MR offer submitted after the MR offer cut off time will be rejected. The MR offer scaling factor of a valid MR offer cannot be re-offered after the MR offer cut off time for that trading day. Doc Ref: SO_OP_ V8 30 November 2015 Page 6 of 21

7 Valid MR offer Term MR offer capacity Accepted MR offer capacity Valid MR reoffer Eligible participants Dispatch of MR offers Recalculation of MR offer stack New round of MR offer process Meaning An MR offer satisfying all the MR offer validation rules is called a valid MR offer. Participants must have a valid MR offer to participate in the MR offer processes. The capacity (in MW) offered in an MR offer for a particular trading interval, for participation in the MR offer process The amount of MR offer capacity (submitted by a Generator or an MNSP in a valid MR offer) that is subsequently allocated in a MR offer acceptance schedule is called the accepted MR offer capacity. According to NER 3.12A.1 (b)(3), the accepted MR offer capacities are locked in and minimum four hours notice should be given to the participant concerned if AEMO wishes to reduce or terminate the accepted MR offer capacities. After the MR offer cut off time has expired for a given trading day, the Generators and MNSPs with valid MR offers can submit MR reoffers. The MR offer price scaling factor has to be the same as the scaling factor used in the last valid MR offer/reoffer before the MR offer cut off time for that trading day. The MR offer capacity in each trading interval of an MR reoffer cannot be lower than the accepted MR offer capacity for that trading interval and MR reoffers that do not satisfy this requirement are rejected. Participants with connection points within the region where the MR is imposed are generally eligible for participating in the MR offer process. Some participants with connection points within the regions where MR is imposed may not be eligible due to the reasons explained in the section 6.4. This is the internal AEMO process of excluding ineligible (but otherwise valid refer Section 5.4) MR offers, calculating the MR offer stack, determining the accepted MR offer capacities and submitting the accepted MR offer capacities to MMS. After the MR offer cut off time, AEMO operations staff will accept and then dispatch the MR offers. Due to reasons such as amendments to Mandatory Restriction Schedules etc., the MR offer stack may have to be re-calculated and a new set of accepted MR offer capacities have to be determined. When the MR offer stack is recalculated, the latest re-offers of the participants who had valid MR offers will be used. The participants who did not have valid MR offers will not be taken into consideration when the MR offer stack is re-calculated. This process involves AEMO advising participants of their intention to complete new round of MR offer process with an extension to the MR offer cut off time, requesting participants to submit MR offers and dispatching MR offers after the MR offer cut off time. The main difference between the recalculation of MR offers stack process and a new round of MR offer process is that the participant who either did not have a valid MR offer or an accepted MR offer in the initial MR offer process will have the opportunity of submitting a valid MR offer and participate in the MR offer acceptance process. Doc Ref: SO_OP_ V8 30 November 2015 Page 7 of 21

8 1 Introduction a) This Mandatory Restriction Offers Procedure is made in accordance with 3.12A of the National Electricity Rules (NER). b) If there is any inconsistency between this Procedure and the NER, the NER will prevail to the extent of that inconsistency. 2 Purpose The purpose of this Procedure is to provide an explanation/background to Restriction Offer Procedures and outlines the arrangements for dispatching the mandatory restriction offers. 3 Application This Procedure applies to AEMO and Registered Participants. 4 Related Policies and Procedures Table 2 Related policies and procedures Policies and Procedure Title National Electricity Rules 3.12A Section 3.12A Mandatory Restrictions NEMMCO Communication No.811 Pricing Under Extreme Conditions: Final Determination 1 National Electricity Market Memorandum of Understanding on the Use of Emergency Powers July 2000 NECA Report 5 Principles Where involuntary load shedding is or would otherwise be necessary and where mandatory restrictions are introduced upon the electricity usage in a region, those restrictions should be integrated into the existing wholesale electricity market. The following extracts from the NECA document Integrating restrictions into the energy market summarise market operation when restrictions are declared. AEMO will call for restriction offers equal to the estimated reduction in demand due to the restrictions. Any participant already presenting to the market could offer capacity to AEMO under these arrangements, including both Generators and Market Network Service Providers. Plant with accepted MR capacity will be the last to be dispatched in the market and, when used, will be offered to the market in such a manner to set the dispatch price at Market Price Cap (MPC). MPC is intended to occur at approximately the same time that load shedding would have been required if restrictions had not applied. Importantly, the normal process for calculating the market price would continue with the deemed capacity and restricted demand. 1 For AEMO s operational reference this NEMMCO Communication No. 811 is available on ShareDocs: Market Reports Doc Ref: SO_OP_ V8 30 November 2015 Page 8 of 21

9 The capacity would be traded out of the energy market. It would in effect be offered, by AEMO, at MPC for dispatch after all other options in the energy market, including scheduled loads, were exhausted. Accepted MR capacity would be bound to AEMO for the period of the restrictions and participants will not be entitled to retain spot market revenue for the dispatch of that capacity during that period. There is no need for what-if pricing, since capacity would have been reduced by approximately the same level as the demand removed by the mandatory restriction. Where the level of accepted MR capacity matched the impact of restrictions on demand, the price outcomes would accurately reflect the supply and demand situation as if restrictions had not been imposed. At the point where restricted demand coincided with the deemed available capacity, accepted MR capacity would be dispatched into the market at MPC. 5.1 Intra-regional constraint If a jurisdiction imposes mandatory restrictions in order to avoid involuntary load shedding as a consequence of an intra-regional constraint rather than a regional lack of reserve condition then AEMO may not necessarily follow the MR offer processes as required by clause 3.12A of the NER. 5.2 Semi-scheduled generation Semi-scheduled generation cannot submit MR Offers to AEMO. 6 Mandatory Restriction Offer Dispatch Process The tasks associated with the MR process are shown in the Figure 1. The timeline for the MR Offer process is indicated in Figure 2. Doc Ref: SO_OP_ V8 30 November 2015 Page 9 of 21

10 Advice from JSSC on imposing MR for the following day AEMO to issue an initial market notice and develop MRS Deliver MRS to JSSC by AEMO JSSC approves MRS and advises AEMO Submit the approved MRS to MMS by AEMO AEMO to issue a market notice requesting MR offers to meet MRS and the MR offer cut off time AEMO to exclude ineligible MR offers Dispatch MR offers after the offer cut-off time and determine accepted MR offer capacities Authorise and submit the accepted MR offer capacities to MMS Continue monitoring MR offer dispatch Figure 1 Mandatory restrictions offer dispatch process 6.1 Initiation of the Mandatory Restriction Process The NER section 3.12A stipulates that the Mandatory Restriction offer process should commence only after AEMO formally receives advice from the Jurisdictional System Security Coordinator (JSSC) of the relevant participating jurisdiction/s that the jurisdiction/s proposes to invoke Mandatory Restrictions. The NEM Responsible Officer (NEM RO) is the nominated AEMO officer to receive this advice from the JSSC of the participating jurisdiction/sjssc. The NER section 3.12A.2(a)(1) indicates that the MR offer process will be followed from the next trading day in the event of jurisdictions imposing MR. Therefore, if jurisdictions decide to impose MR for the current day AEMO has no obligation to follow the MR offer process for the current day. The information available for the Jurisdictions to make the decision to impose Mandatory Restrictions include The Low Reserve Condition (LRC) and Lack of Reserve (LOR) 1, 2 & 3 Notices published by AEMO. Doc Ref: SO_OP_ V8 30 November 2015 Page 10 of 21

11 The regular communication taking place between the responsible officers of jurisdictions and AEMO on the reserve levels and the forecast supply problems. 6.2 Mandatory Restriction Schedule (MRS) As soon as a formal advice from JSSC is received to invoke the MR in the participating jurisdiction, AEMO will issue a market notice informing that a decision had been made to impose MR for the participating jurisdiction/s, for which MR processes will be followed for the indicative duration of the proposed MR. AEMO will prepare a MRS within four hours of receiving such advice from the jurisdiction and forward it to JSSC for approval. JSSC have the right to amend the MRS and are responsible for approving the MRS and sending it back to AEMO. Once MRS has been approved by the JSSC, AEMO will submit the MRS to the Market Management Systems (MMS). 6.3 MR offer submission Once the approved MRS has been submitted to the MMS, AEMO will issue a market notice informing that the MRS had been submitted to the MMS, informing the offer cut off time and requesting the participants to submit MR offers to participate in the MR offer process. When selecting an MR offer cut off time, the participants will be given a minimum duration of two hours to submit MR offers. Participants should submit a valid MR offer by the offer cut off time to participate in the MR offer process. According to NER 3.12A.1(b)(8), AEMO must only accept restriction offers from Scheduled Generators and Scheduled Network Service Providers with a connection point located in the region in which mandatory restrictions apply or are proposed to apply. Some participants may not be eligible to participate in the MR process even if the connection point is in the region where MR is imposed due to the reasons given in the section 6.4. Refer Appendix A for a list of rules used by MMS systems to validate the MR offer component of the energy market offers. 6.4 Ineligibility of generating units affected by binding network constraints Generating units and MNSPs that have access to their regional reference node constrained by intra-regional constraints will be deemed ineligible to offer for mandatory restrictions. In these circumstances the dispatch of such generating units would render the operation of the mandatory restriction process ineffective at preserving signals when the mandatory restrictions reduce demand. As the mandatory restrictions process will not achieve the results for which it was intended, generating units subject to a binding intra-regional constraint will thereby be deemed ineligible and excluded from participating in the mandatory restriction process. This is in accordance with Rules clause 3.12A.1(c)(1); All capacity the subject of the restriction offer must be available for immediate dispatch in the central dispatch process at all times. If the mandatory restrictions apply to only a portion of a region which does not include the regional reference node for that region then restriction offers from Generators and Market Network Service Provider (MNSP) in that region shall not be considered as valid and hence will not be accepted. Doc Ref: SO_OP_ V8 30 November 2015 Page 11 of 21

12 6.5 MR Offer Dispatch After the MR offer cut of time, AEMO will check the eligibility of the valid MR offers received and de-authorise ineligible offers. Then an MR offer stack will be determined for each trading day for each region. This MR offer stack will be used to accept MR offers to meet MRS. This process will determine the accepted MR offer capacities for each of the participant in the MR offer process. The MR offer stack is prepared in the increasing order of Loss Adjusted Offer Factor (LAOF), where: LAOF = (MR Offer Price Scaling Factor) * (Transmission Loss Factor) In the event of tied MR offer LAOFs, the ASCII order of the DUIDs will be used to break tied offers by MMS, with the MR offer capacity of the alphabetically-earliest DUID accepted first. Doc Ref: SO_OP_ V8 30 November 2015 Page 12 of 21

13 Figure 2 Mandatory Restriction Offer Timeline Doc Ref: SO_OP_ V8 30 November 2015 Page 13 of 21

14 Mandatory Restriction Offers 6.6 Submit accepted MR Offers to MMS Once the accepted MR offer capacities have been determined to meet the MRS, AEMO operations staff will authorise and submit the accepted offer quantities to MMS. These accepted offer quantities will then be used to determine the constraint equations to be used in the Dispatch and Predispatch processes to achieve the required outcomes of the MR offer process. The naming convention used for the constraint equations associated with MR process is ~DUID. These constraint equations will then automatically be applied to the Dispatch and Predispatch. The format of these constraint equations would be of the form: (ConnectionPointID of DUID) (Bid Max_Availability) (Accepted MR offer quantity Deducted MR capacity) Refer to section 7.2 for managing the plant capacity reductions during a MR period. The penalty weight associated with these MR offer constraint equations will be evenly distributed between 12xMPC and 25xMPC, subjected to the number of accepted MR offers for each period. The cheapest accepted MR offer is assigned the highest penalty weight of 25 and the dearest accepted MR offer is assigned the lowest penalty weight of 12. The individual half hourly accepted MR offer quantities are confidentially advised to the participant via Infoserver or CSV files, immediately after the accepted MR offer quantities have been submitted to the MMS. 6.7 Load Forecasting During a Mandatory Restriction Period AEMO will submit the load forecasts for the region under consideration without taking into account the effects of the mandatory restrictions to the MMS until the time the MR offers are dispatched. After the MR offers have been dispatched and the accepted MR offer capacities have been submitted to MMS, the load forecasts which reflect the mandatory restrictions will be submitted to the MMS. 7 Monitoring MR Offer Dispatch AEMO is responsible for regularly reviewing the MRS in conjunction with the JSSC. It is the responsibility of the Generators and MNSPs to inform AEMO of any deducted MR capacity. In managing such situations in accordance with the Rules: Clause 3.12A.1(b)(3); AEMO may at any time terminate an accepted restriction offer in whole or in part by providing 4 hours notice to the relevant Scheduled Generator or to the Scheduled Network Service Provider that an accepted restriction offer is so terminated. Clause 3.12A.1(b)(2); AEMO must use its reasonable endeavours to acquire capacity from valid restriction offers or to terminate in whole or part an accepted restriction offer in a manner that minimises the estimated restriction shortfall amount. Clause 3.12A.3(a); AEMO must immediately upon publication of a mandatory restriction schedule or an amended mandatory restriction schedule use its reasonable endeavours to acquire in accordance with the restriction offer procedures, capacity to meet the mandatory restriction schedule or the amended mandatory restriction schedule as the case may be. Clause 3.12A.3(b); AEMO must terminate in accordance with the restriction offer procedures such number of accepted restriction offers, in whole or in part, so that the total capacity of existing accepted restrictions offers as far as practicable equals the amended mandatory restriction schedule. Doc Ref: SO_OP_ V8 30 November 2015 Page 14 of 21

15 Mandatory Restriction Offers There could be situations where the amount of MR capacity available in the MR offer stack is not sufficient to meet MRS (due to the increased MRS and/or capacity reductions of plant participating in the MR offer process) and it may be required to have a new round of MR offers. The general principle adopted in these situations is that if the MR capacity available in the current MR stack is sufficient to meet MRS with a 50 MW margin, the MR capacity available in the stack will be used. If MR capacity available in the current MR stack is lesser than 50 MW to the MRS for any half hour, a new round of MR offer process will be initiated. 7.1 Review of MRS AEMO is responsible for regularly reviewing the MRS. If AEMO believes that, with the latest available information, the approved MRS has to be amended, at least threshold amounts supplied in Table 3 below, the MRS will be amended in consultation with the relevant JSSC. Once the JSSC has approved the amended MRS, AEMO will submit the new MRS to MMS and issue a market notice indicating the use of amended MRS. AEMO will ensure that the unrestricted load profile is maintained as accurate as possible. Once an MR period commences, AEMO will regularly compare the restricted load curve with the observed regional load. If the difference between the two profiles exceeds the threshold given in Table 3, AEMO operations staff will initiate action to amend the MRS in conjunction with the JSSC. The process of maintaining the accuracy of the MRS is shown in the Figure 3. Table 3 MRS Regional Thresholds Region Threshold (MW) Queensland 100 New South Wales 150 Victoria 100 South Australia 50 Tasmania 50 Doc Ref: SO_OP_ V8 30 November 2015 Page 15 of 21

16 Mandatory Restriction Offers AEMO reviews MRS Deliver revised MRS to JSSC JSSC approves revised MRS and inform AEMO Publish revised MRS and issue a market notice Increase in MRS? No Use all available MR offers and request more MR offfers to meet MRS via a market notice Yes Yes Need more offers? No Determine the accepted MR offer capacities to be reduced Give 4 hour notice of termination of MR offer and issue a market notice Exclude ineligible MR Dispatch MR offers after the offer cut-off time Use available offers to meet the MRS and issue a market notice Authorise and submit to MMS Continue monitoring MR offer dispatch Figure 3 Revision of Mandatory Restriction Schedule Process for Meeting the Amended MRS There are three possible scenarios where the difference between the amended MRS and the total amount of currently accepted MR offer capacities are larger than the thresholds given in Table 3. Doc Ref: SO_OP_ V8 30 November 2015 Page 16 of 21

17 Mandatory Restriction Offers Case 1: The MRS has increased by more than the threshold value for the region, the JSSC has approved the change and the total MR capacity available in the current MR stack is sufficient to meet new MRS. Course of action: A market notice would have been issued when the amended MRS had been submitted to MMS by AEMO operations staff. Use the available MR capacities in the current MR offer stack and to meet the new MRS. This can be done by recalculating the MR offer stack. Submit and authorise the latest accepted offer capacities to MMS. Issue a market notice indicating that the amended MRS had been met using the MR offer capacities in the current MR offer stack. Case 2: The MRS has increased by more than the threshold value for the region, the JSSC has approved the change and the difference between total MR capacity available in the current MR offer stack and the new MRS is greater than 50 MW for one or more half hours. Course of action: A market notice would have been issued when the amended MRS had been submitted to MMS by AEMO operations staff. Recalculate the MR offer stack and use all the MR offer capacities in the stack. These accepted MR offer capacities will be locked in for the next four hours. Issue a market notice informing that the available MR capacities is not sufficient to meet the amended MRS and the need to commence a new round with a new offer cut off. Note that minimum of two hours will be allowed for participants to submit MR offers. Commence a new round of MR offer process. Case 3: The MRS has decreased by more than the threshold value for the region, the JSSC has approved the change. Course of action: In the market notice informing participants of the use of amended MRS, state that some of the accepted MR offer capacities may have to be reduced or terminated from four hours onwards due to the reduced MRS. Recalculating the MR offer stack will determine a new set of accepted offer capacities from four hours onwards from the current time. Authorise the new accepted offer capacities and submit to MMS. 7.2 Changes to Plant Availability and MR Capacity There could be situations where the Generator/MNSP availability reduces due to plant problems. Such availability reductions could also necessitate reductions to MR offer capacities. Similarly the reduced plant availabilities can improve due to the return to service of plant auxiliary equipment etc. In such situations, the actions required from the respective participant and AEMO depend on whether the MR offer of the Generator/MNSP in question had been totally or partially accepted in the MR offer dispatch. Refer the Figure 4 for the different possibilities and the recommended course of action. Doc Ref: SO_OP_ V8 30 November 2015 Page 17 of 21

18 Mandatory Restriction Offers Case 1: If the plant availability change does not impact on the MR offer capacity (the participant to decide) then participant should submit an energy market re-offer to reflect the changed availability. No further actions will be required since the Dispatch/Predispatch uploaders use the latest availabilities in the offers in determining the right hand side of the constraints associated with MR. Case 2: If there has been a plant availability reduction, which also requires a reduction in MR offer capacity but not affecting the accepted MR offer capacity, then the participant should submit an energy market re-offer which also reflects the correct MR offer capacity. No further actions will be required. Case 3: In the event of a plant availability reduction requiring reductions to accepted MR offer capacities, the participant should immediately contact the AEMO control room staff and advise the reduction to the accepted MR offer capacity required. AEMO control room staff will then manually reduce the accepted MR offer capacity to the required amount. AEMO control room staff will also apply a quick constraint with a right hand side less than or equal to the reduced availability of the Generator/MNSP for the period where the participant has requested a reduction to the accepted MR offer quantity. Note that the participant may also elect to reduce their bid Max Availability. Once the accepted MR offer quantity of a gen/mnsp has been manually reduced, such reductions can only be revoked from four hours from the current time. This is required to ensure that there will be no over-acceptance of MR offers for the period from the current time to four hours ahead period (remembering that AEMO cannot reduce accepted MR capacity of other participants within four hours). It is also to be noted that the participants cannot submit energy market re-offers with MR offer capacities lower than the accepted MR offer capacities (this is the accepted MR offer capacity originally accepted, and not the MR offer capacity subsequently reduced due to plant problems experienced). Such re-offers will be rejected by MMS systems. Doc Ref: SO_OP_ V8 30 November 2015 Page 18 of 21

19 Mandatory Restriction Offers Participant advises a plant capacity reduction Submit Energy Market reoffer No Impact MR Offer Capacity? Yes Submit Energy Market and MR reoffer No Impact accepted MR offer capacity Yes Trader phone call to AEMO advising the reduction and Energy Market Reoffer AEMO to invoke reduction of accepted offer capacity and apply a quick constraint. Refer case 3 in section 6.2 Need more offers to meet MRS? No Yes Use all available MR offers and request more MR offfers to meet MRS via a market notice Use available offers to meet the MRS Exclude ineligible MR offers Dispatch MR offers after the offer cut-off time Authorise and submit to MMS Continue monitoring MR offer dispatch Figure 4 Plant availability reductions during a MR period Doc Ref: SO_OP_ V8 30 November 2015 Page 19 of 21

20 Mandatory Restriction Offers 8 MR Offer Settlements The settlements process for MR offers is given in the NER B. A brief explanation of the stages of MR offer settlements is given in the Figure 5 below. AEMO must as soon as reasonably possible after the Mandatory Restriction period determine the: (i) aggregate spot income due to AEMO from the restriction offers (ii) aggregate amount payable by AEMO for the restriction offers (iii) restriction shortfall amount (i) - (ii) Cap restriction shortfall amount and corresponding restriction offers payment accordingly under clause 3.12 A.7(c) and (d) If the restriction shortfall amount is less than minus $100,000, appoint an 'Independent Expert' to determine the restriction demand reduction claimed by each market customer in a region in accordance with procedure developed under this consultation Calculate restriction contract amount under clause B Figure 5 MR offer settlements Doc Ref: SO_OP_ V8 30 November 2015 Page 20 of 21

21 Mandatory Restriction Offers Appendix A Validation Rules for MR Offers Participants are responsible for submitting MR offers satisfying the agreed validation rules. The MMS performs the following validations. The validation rules for MR offers have been published in the document Participant Input Interface Energy-MNSP-FCAS Bid File Submission. This is one of the documents published with the Change Notice 271a issued to participants on 24/09/2002. The key validation rules are; When either MR Offer Price Scaling Factor line or Scaling Factor value are not found, the energy market offer is considered to not include a MR offer component. In this case submission of a MR capacity (zero or otherwise) for any trading interval invalidates the entire Offer. If a non-null MR Offer Price Scaling Factor is specified then non null MR Capacity values must be supplied for all intervals. If a MR Offer Price Scaling Factor is not specified then no MR Capacity value can be specified for any interval. MR Offer Price Scaling Factors are subject to an MR offer cut off time. If an initial MR Offer is received subsequent to this time it will be rejected. If a valid MR Offer has already been received and the MR Offer Cut Off Time has expired, the Offer cannot change the MR Offer Price Scaling Factor from that of the previous Offer. After the initial MR Offer Acceptance Schedule (determined by the existence of an authorised stack for this event) a re-offer cannot lower the MR Capacity below the current accepted MR Capacity. A reduction in accepted MR capacity will be achieved through verbal notice to AEMO who will apply the reduction for the periods requested manually. MR Offer Price Scaling Factor null or 0. To a maximum of four decimal places MR Capacity must be either blank or a cardinal number (Integer 0) MR Capacity Max_Avail MR Capacity 30* ROC-DOWN MR Capacity 30* ROC-UP (MNSP)MR Capacity blank or 0 for periods where a fixed load >0 has been specified Doc Ref: SO_OP_ V8 30 November 2015 Page 21 of 21