Directions
Under the National Electricity Rules (NER), the Australian Energy Market Operator (AEMO) can take action to maintain or restore the power system to a reliable operating state. These are called “market events”. When an event like this occurs, AEMO can request generators to increase supply where possible, as well as requesting large commercial users to significantly reduce load or shut down.
In return, AEMO financially compensates generators who increased supply, or those users who reduced their consumption. The cost of this compensation is then passed back to retailers, such as Origin, who then pass the cost to those customers who consumed electricity in that region, at the time of the event. AEMO charges differ depending on the region. Customers are charged based on the region their supply is connected to.
All events are listed on the AEMO website: Market event reports.
What is the difference between the RERT and Directions?
The Reliability and Reserve Emergency Trader (RERT) is a two-way contract between AEMO and commercial energy users. During times when the market has not provided enough energy to meet demand, such as extreme heat events, AEMO may request generators to increase supply as well as ask large commercial users to significantly reduce load or shut down. This program is optional for large commercial users who will be compensated for their participation (based on eligibility). Non-participating customers will incur a charge, passed through by
AEMO via the energy retailer, as a cost of operating this mechanism. (Read more about RERT here.)
Directions, on the other hand, are typically given by AEMO to scheduled generators to make them available for generation even if they are not commercially available at that time. These generators will be compensated by AEMO for their compliance. The cost of operation is then passed through to customers by AEMO via the energy retailer.
How is the Directions charge calculated?
Directions charges relating to the June 2022 market suspension
Directions charges are calculated after claims for compensation are submitted by market participants. In most instances, the claims are submitted shortly after the event. Claims for the June 2022 event were reviewed by an independent auditor and have been on-going after an initial charge was announced in July 2022. As a result, AEMO announced an amended charge on 6 January 2023.
Origin can only charge directions charges after the charges are announced by AEMO. In some instances, the charges may be adjusted by AEMO after the first charge is applied, which means some customers may be charged more than once.
