Maximum Reserve Capacity Price

Each year the IMO is required to determine the Maximum Reserve Capacity Price in accordance with the Market Procedure: Maximum Reserve Capacity Price.

The Maximum Reserve Capacity Price (MRCP) sets the maximum bid that can be made in a Reserve Capacity Auction and is used to determine an administered Reserve Capacity Price if no auction is required. The MRCP aims to reflect the marginal cost of providing additional Reserve Capacity in each Capacity Year. It is established by undertaking a technical bottom-up cost evaluation of the entry of a 160MW OCGT generation facility entering the WEM in the relevant Capacity Year.

Annual MRCP review process

The general steps in the annual MRCP review process are:

  • The IMO conducts a review of the Maximum Reserve Capacity Price and produces a Draft Report.
  • The IMO publishes the Draft Report and requests submissions from the public on the review.
  • The IMO reviews all submissions made and revises the Maximum Reserve Capacity Price if appropriate.
  • The IMO provides a final report which is submitted to the Economic Regulation Authority (ERA) for approval.
  • Following approval or further review, the IMO publishes the approved Maximum Reserve Capacity Price.
 
 
5-yearly methodology review

The IMO is required to review the Market Procedure at least once in every five year period (Clause 4.16.9 of the Market Rules). This review was conducted during 2010 and 2011 by the Maximum Reserve Capacity Price Working Group.

This review culminated with the development of a Procedure Change Proposal to amend the Market Procedure. The Procedure Change Proposal PC_2011_06 was submitted into the Procedure Change Process on 6 September 2011 and the Final Report was published on 21 October 2011. The amended Market Procedure has now commenced.

The Procedure Change Proposal and related documents can be found on the PC_2011_06 page.

 
 
Reserve Capacity Prices since market start

For the first Reserve Capacity Cycle, the Maximum Reserve Capacity Price was set at $150,000 per MW per year. This Maximum Reserve Capacity Price applied from Energy Market Commencement to 1 October 2008.

The graph below displays the Maximum Reserve Capacity Price and the constituent costs for each Capacity Year from 2008/09.


The following table details the Reserve Capacity Price effective in the Market. The Reserve Capacity Price is the price paid by the IMO for Capacity Credits not traded bilaterally between Participants.

Period Maximum Reserve Capacity Price ($/MW/yr) Reserve Capacity Price ($/MW/yr)
01/10/16 - 01/10/17
$176,800  
01/10/15 - 01/10/16 $157,000 $120,199.31
01/10/14 - 01/10/15 $163,900 $122,427.87
01/10/13 - 01/10/14 $240,600 $178,476.69
01/10/12 - 01/10/13 $238,500 $186,001.04
01/10/11 - 01/10/12 $164,100 $131,804.58
01/10/10 - 01/10/11 $173,400 $144,235.38
01/10/09 - 01/10/10 $142,200 $108,458.57
01/10/08 - 01/10/09 $122,500 $97,834.89
01/10/07 - 01/10/08 $150,000 $127,500.00
01/10/06 - 01/10/07 $150,000 $127,500.00
21/09/06 - 01/10/06 $150,000 $127,500.00
 
 
2014 Maximum Reserve Capacity Price (for 2016/17)
 
 
2013 Maximum Reserve Capacity Price (for 2015/16)

2013 Maximum Reserve Capacity Price (for 2015/16)

For the 2015/16 Capacity Year, the IMO proposed a final revised value for the Maximum Reserve Capacity Price of $157,000 per MW per year to the ERA.

The ERA provided notification to the IMO on 29 January 2013 that it had approved this revised Maximum Reserve Capacity Price in accordance with clause 2.26.1 of the Market Rules.

The Maximum Reserve Capacity Price of $157,000 per MW per year will be effective from 1 October 2015 through to 1 October 2016.

Copies of the various relevant documents can be found below.

Final Report

Draft Report

Applicable Documents

Submissions received during the consultation period

Alinta Energy [3.6MB]

Merredin Energy [383kB]

Perth Energy [908kB]

Verve Energy [260kB]

 
 
Previous Maximum Reserve Capacity Prices

The Maximum Reserve Capacity Price Archive page contains all of the relevant documentation for each of the previous Maximum Reserve Capacity Price determinations.

Click here to go to access the Maximum Reserve Capacity Price Archive.