Retailer Reliability Obligation draft interim forecasting guideline

PIAC responded to the AER’s consultation paper on the Forecasting Best Practice Guideline for the Retailer Reliability Obligation (RRO).

The issues and our recommendations on forecasting are covered in our earlier submission to AEMO’s Reliability Forecasting Methodology Issues Paper.

PIAC remains concerned about the need for the RRO in general. Nonetheless PIAC acknowledges that, if the RRO is to be implemented, it is important that the ‘triggering’ of a reliability obligation be based on good information.

PIAC considers reliability forecasting, and forecasting more generally, should be guided by the following principles:

• Forecast methodologies and inputs should be transparent and open to scrutiny by stakeholders.
• Forecast inputs and outputs should incorporate a range of scenarios to reflect degrees of confidence and uncertainty, rather than relying on single scenarios.
• Forecasters should learn from the accuracy or otherwise of past forecasts by themselves and others. In particular, forecast methodology should seek to incorporate some form of ‘error correction loop’ so that performance can improve over time.

Following from this, we support in-principle the AER’s proposal that AEMO use the Forecasting Best Practice Consultation Procedures to periodically review its forecasting methodologies and engagement process, unless there is a material change in market circumstances that justifies more frequent consultation. We consider a four-yearly review period is appropriate for this with the provisions for earlier review if required.