Australian Energy Market Operator Fees

Australian Energy Market Operator Fees

In September 2022, LPE issued market charges to its customers. The passthrough of these regulatory costs consists of three specific fees which are out of LPEs control: AEMO ancillary fees, UFE, and RERT events.

We understand that these charges are not ideal, however the continued volatility in the Queensland electricity market has led to increased electricity costs for all consumers.

Please find below additional information regarding these chargeback items.

Unaccounted for Energy (UFE)

On May 1, 2022, the Australian Energy Market Operator (AEMO) implemented a rule change to introduce the new Global Settlement Framework.

This new rule enables AEMO to bill electricity consumers for Unaccounted for Energy (UFE). UFE is the difference between the total amount of energy being drawn into a distribution zone and the metered usage of all customers within that zone. 

AEMO Ancillary Fees

AEMO operates on a user-pays cost recovery basis and recovers all operating costs through fees paid by participants.

Ancillary services are used by AEMO to manage the power system safely, securely, and reliably. These services maintain key technical characteristics of the system, including standards for frequency, voltage, network loading, and system restart processes.

Ancillary service costs are dependent upon the amount of service required at any particular time and, as these amounts can vary significantly from period to period, costs will also vary.

Reliability and Emergency Reserve Trader (RERT)

RERT is a function also managed by AEMO to maintain network reliability under extreme demand conditions. 

Earlier this year there was a high demand period in Queensland where supply could not meet demand.  Under these circumstances AEMO calls upon two types of parties; first are large energy users, these are asked to ‘turn off’ or ‘power down’, second are owners of generation units who can quickly begin to generate additional electricity to meet demand. All this is done to avoid massive power outages and damage to the electricity network.

This comes at a cost and given it is all short notice, the cost is high.  Those asked to turn off or power down are compensated, and the generation units ‘sell’ their electricity to the grid for an inflated price.

This cost is passed on to electricity retailers (like LPE) in proportion to the amount of energy our customers used over this high-demand period.  We are then obliged to pass these costs on to our customers.

The rules governing Energy Reserves, Emergency Actions, RERT charging and Reserve Scheduling can be found in the National Energy Rules which can be found on the Australian Energy Market Commission website