High demand could lead to increased charges this summer

High electricity demand, climatic events and extreme temperatures are all typical of an Australian summer. This is why it’s traditionally the time of year the power network is most stretched.

As we’re nearing summer, it’s important to understand how your business energy costs may increase under the Reliability and Emergency Reserve Trader (RERT) scheme. And for eligible large electricity users, how you could generate additional revenue by becoming a RERT provider.

RERT is an important mechanism that helps ensure network supply meets demand and maintains power system reliability and security. RERT involves contracting large energy users to ‘switch off’ to provide emergency relief if the network is threatened.

This article offers some useful information that could help you generate revenue this summer or simply help you better understand your energy charges.

How RERT works

During a significant power event, the Australian Energy Market Operator (AEMO) may call on RERT providers to reduce their electricity demand. Providers can respond by using less energy from the grid or generating power from their own generators.

Shell Energy, like many other energy retailers, is a RERT provider. Our eligible large customers can sign up to Shell Energy’s RERT program and be paid to reduce their energy consumption during these peak demand periods.

Customers that are deemed eligible will be paid the following amounts for each RERT event where they are called upon by Shell Energy:

RERT Demand Response Value Example - 1MW* 1 event 3 hours Example - 1MW* 1 event 6 hours
Response times Value ($ ex GST) $ ex GST $ ex GST
Pre-activation payment 1 hr $10,00/MW per event $10,00 $10,00
Activation payment 1 hr $9,00/MWh (min of 3 hrs, max of 6 hrs) $27,000 $54,000
Total $37,000 $64,000

Note: in summer 2019/2020 in Victoria, pre-activation occurred on four occasions and activation occurred on two occasions. Pre-activation payments are paid to RERT providers who need time to prepare for curtailment, while activation payments are paid to RERT providers who respond during the RERT event.

The compensation costs are borne by all electricity consumers.

Eligibility for our RERT and Demand Response programs

Shell Energy customers in Victoria that operate large sites (>2 gigawatts per annum) and can run generators or curtail power within two hours are welcome to express interest in participating in Shell Energy’s RERT program this year. ERM will accept all suitable customers on a first come first serve basis until its volume obligations to AEMO are met.

Another way to be rewarded for reducing your consumption during periods of peak demand is through our Demand Response program. Customers in Victoria, NSW, Queensland and South Australia that can reduce consumption by at least 300 kilowatts, typically within 30 minutes, may be eligible to access this program.

RERT costs have increased in recent years

RERT has been around for decades. Before the summer of 2017/2018, it had only been called upon three times in 20 years at a total cost of $5 million1.

Since then, RERT capacity was dispatched twice in the summer of 2017/2018 when high temperatures, bushfires, and generator and transmission network outages increased demand and affected supply. A single six-hour period in January 2018 cost Australian energy consumers $24 million.

During the summer of 2019/2020, overall RERT costs increased again to $40.6 million2.

Improving transparency of your RERT costs

RERT costs are charged by AEMO and are borne by energy consumers. For our large customers these costs are itemised on your retail electricity bill.

As RERT costs have increased significantly in recent years and AEMO’s calculation methodology has changed, we are taking steps to increase transparency and better match these costs for our customers. These changes include a clearer breakdown of RERT costs on our invoices and passing through RERT costs on a State-specific (rather than whole of National Electricity Market) basis.

Similarly, AEMO passes on costs incurred in maintaining a safe, secure electricity system. They’re referred to as ancillary service charges. Until now, RERT and ancillary service charges have been bundled together as a single line item on large site electricity bills. We’ll now also list state-specific ancillary service charges as a separate line item on our invoices too.

Get in touch

Should you have any questions or would like further information, contact your dedicated Shell Energy account manager, call us on 13 23 76 or email [email protected]. Alternatively, get in touch with your energy consultant.

1 AEMO, Expiry of the Reliability and Emergency Reserve Trader, 3 January 2012.

2 AEMO, Reliability and Emergency Reserve Trader (RERT) End of Financial Year 2019-20 Report.

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