Economic Regulation Authority Spinning reserve ancillary service: margin values for the 2018–19 financial year Issues Paper January 2018 Economic Regulation Authority 4th Floor Albert Facey House 469 Wellington Street, Perth Mail to: Perth BC, PO Box 8469 PERTH WA 6849 T: 08 6557 7900 F: 08 6557 7999 E:
[email protected] W: www.erawa.com.au National Relay Service TTY: 13 36 77 (to assist people with hearing and voice impairment) We can deliver this report in an alternative format for those with a vision impairment. © 2018 Economic Regulation Authority. All rights reserved. This material may be reproduced in whole or in part provided the source is acknowledged. Economic Regulation Authority Contents 1. Introduction 2 Invitation to make submissions 3 2. Proposed margin values 4 3. What is spinning reserve and its opportunity cost? 5 4. What are margin values? 8 5. 2018–19 modelling of margin values 9 5.1. Determining the availability cost 11 5.2. Modelling outputs 14 Attachment 1. AEMO’s review of 2018–19 margin values 16 Issues paper: Margin values for the 2018–19 financial year 1 Economic Regulation Authority 1. Introduction Synergy is currently the default provider of the spinning reserve ancillary service under the Wholesale Electricity Market Rules (market rules).1 The market rules also allow other generators to provide spinning reserve through ancillary service contracts, provided they are less expensive than Synergy.2 Under the market rules, generators pay a contribution to the spinning reserve requirement.3 Payments are administered through the operation of the balancing market settlement process.