Spot price categories

There are four categories for spot electricity prices: forecast, dispatch, interim and final prices. Industry participants can access these prices on the wholesale information and trading system.

Forecast prices

The wholesale information and trading system (WITS) presents forecast prices that have been calculated using the scheduling, pricing and dispatch model. This model takes into account:

  • the expected state of the electricity system
  • generator offers
  • purchaser bids (or in some cases a forecast of demand)
  • dispatchable demand offers.

Forecast prices give industry participants valuable information on when and how best to use electricity. There are three types of forecast schedule:

  • Weekly dispatch schedule (WDS) provides an initial indication of market conditions up to 8 days ahead.
  • Price responsive schedule (PRS) indicates the impact on forecast prices if participants react to price in the way that they indicate in any demand side bids they submit.
  • Non-responsive schedule (NRS) assumes all loads consume at the maximum level indicated in their bids (and ignores any indicated price responsiveness).

The system operator uses the NRS when assessing forecast power system security. Participants can compare the complimentary PRS results to estimate the impact of the price sensitivity they’ve indicated in their demand bids.

Each PRS and NRS is solved for two different lengths of forecast pricing:

  • Short schedules are produced every 30 minutes and forecast prices for the next 4 hours
  • Long schedules are produced every 2 hours and forecast prices for the next 36 hours.

Each WDS is published once a day and looks forward 7 days.

Dispatch prices

WITS presents dispatch prices every time the system operator dispatches generation to meet demand in real-time using the scheduling, pricing and dispatch model.

The system operator aims to dispatch the power system at least once every 30-minute trading period, though it can dispatch more often if system conditions change.

The dispatch prices are used by the clearing manager to produce interim prices, by calculating the time-weighted average of the dispatch prices published during the trading period.

Interim prices

Interim prices are calculated by the clearing manager and published by the WITS manager at the end of the trading period in which the generated electricity is consumed.

The publishing of interim prices enables industry participants to identify any errors or issues before final prices are published. Participants can claim a pricing error, which will delay the publication of final prices until the error is considered and addressed (if necessary).

Pricing error claims

Industry participants have until midday the business day after interim prices are published on WITS to submit a claim for a pricing error via email to the clearing manager. A pricing error is:

  • a dispatch or reserve price that wasn't made available on WITS being used to calculate the interim price or interim reserve price; or
  • the clearing manager having followed an incorrect process in calculating that interim price or interim reserve price.

If a valid claim is submitted, the publication of all final prices and final reserve prices for the affected trading periods is automatically delayed. The clearing manager makes a recommendation on the pricing error claim to us. We then decide if the claim should be upheld. If we uphold the pricing error claim, we may direct the clearing manager to correct the interim price error and republish the interim price.

Final prices

Final prices are confirmed by the clearing manager and published by the WITS manager.

The clearing manager uses final prices to calculate invoices for the settlement of trades between the sellers (for example, generators) and buyers of electricity (for example, retailers and major industrial consumers). The invoices are sent via WITS.

Final prices affect the buyers who choose to purchase electricity without managing spot price risk through the hedge market. You can view pricing trends in the monthly WITS reports.

Scarcity prices

On very rare occasions, the available generation may not be enough to meet the expected demand, this is known as a scarcity situation.

Scarcity prices can be published in any pricing category, depending on the system conditions in the market schedule. In the forecast schedules, scarcity prices signal the potential for the system operator to instruct demand to be reduced to meet the available generation. If a scarcity price is signalled in a dispatch schedule, the system operator may call for a reduction in demand to ensure system security is maintained. The scarcity prices reflect the value of this 'lost load'.

Scarcity prices are intended to provide a long-term signal for generators to invest in more generation or consumers to invest in demand response technologies.