Electricity

Maximum Reserve Capacity Price

The Maximum Reserve Capacity Price (MRCP) sets the maximum price that may be offered in a Reserve Capacity Auction and is also used to set an administered Reserve Capacity Price if no auction is required. Each year, the IMO is required to determine the MRCP in accordance with the Market Procedure: Maximum Reserve Capacity Price

The MRCP aims to establish the marginal cost of providing additional Reserve Capacity in each Capacity Year. The MRCP is calculated by undertaking a technical, bottom-up cost evaluation of the entry of a 160 MW open cycle gas turbine generation facility in the WEM in the relevant Capacity Year.

The steps the IMO follows to complete the annual review of the MRCP are:

  • calculate the draft value of the MRCP and publish the results in a draft report;
  • request public submissions on the draft report;
  • assess public submissions and adjust the MRCP if appropriate;
  • submit the final value of the MRCP in a final report to the Economic Regulation Authority (ERA) for approval; and
  • publish the final report once it has been approved by the ERA.

The MRCP calculated for the 2015 Reserve Capacity Cycle is $164,800 per MW per year, and will apply from 1 October 2017 to 1 October 2018.

For more information on the 2015 and previous MRCPs, please see the accompanying reports below.

Historic Maximum Reserve Capacity Prices

The MRCP was set at $150,000 per MW per year for the first Reserve Capacity Cycle, applying from market start to 1 October 2008. The figure below shows the breakdown of the cost components of the MRCP for the 2008-09 to 2017-18 Capacity Cycles. 

The table below shows the MRCP and Reserve Capacity Price for each Capacity Year since market start. The Reserve Capacity Price is paid by the IMO for Capacity Credits not bilaterally traded between Market Participants. Historically, the Reserve Capacity Price has been lower than the MRCP as a result of excess capacity in the SWIS.

Capacity Year       MRCP ($ per MW per year)         Reserve Capacity Price ($ per MW per year)       
2017-18 $164,800  
2016-17 $176,800  
2015-16 $157,000 $120,199.31
2014-15 $163,900 $122,427.87
2013-14 $240,600 $178,476.69
2012-13 $238,500 $186,001.04
2011-12 $164,100 $131,804.58
2010-11 $173,400 $144,235.38
2009-10 $142,200 $108,458.57
2008-09 $122,500 $97,834.89
2007-08 $150,000 $127,500.00
2006-07 $150,000 $127,500.00
2005-06 $150,000 $127,500.00


2015 Maximum Reserve Capacity Price (for 2017-18)

For the 2017-18 Capacity Year, the IMO proposed a final revised value for the Maximum Reserve Capacity Price of $164,800 per MW per year to the Economic Regulation Authority (ERA).

This value was approved by the ERA on 30 January 2015 in accordance with clause 2.26 of the Market Rules. The Maximum Reserve Capacity Price of $164,800 per MW per year will be effective from 1 October 2017 to 1 October 2018.

Copies of the various relevant documents can be found below.

2014 Maximum Reserve Capacity Price (for 2016-17)

For the 2016-17 Capacity Year, the IMO proposed a final revised value for the Maximum Reserve Capacity Price of $176,800 per MW per year to the ERA. This value was approved by the ERA on 30 January 2014 in accordance with clause 2.26 of the Market Rules. 

The Maximum Reserve Capacity Price of $176,800 per MW per year will be effective from 1 October 2016 to 1 October 2017.

Copies of the various relevant documents can be found below.

Previous Maximum Reserve Capacity Prices (before 2014)

MRCP determinations made before 2014 can be found here.

Five-yearly methodology review

Related information

The IMO is required to review the Market Procedure: Maximum Reserve Capacity Price at least once every five years (clause 4.16.9 of the Market Rules). This review was last completed in 2011 by the Maximum Reserve Capacity Price Working Group.

As a result of the last review, the IMO developed a Procedure Change Proposal to amend the Market Procedure. The amended Market Procedure commenced in October 2011. The Procedure Change Proposal and related documents can be found here.

The next five-yearly review is scheduled to begin in 2015.