'Local Price' (formerly referred to as the 'CPD Price')

The AEMO publishes data in the EMMS that makes it possible (except for dispatch intervals incurring Over-Constrained Dispatch) to calculate a ‘Local Price’ for each DUID, for each dispatch interval

… which we used to refer to as the ‘CPD Price’ for the unit.

History

This was a metric we first used on 2019:

1) At that time we began referring to it as a Connection Point Dispatch (CPD) Price, to help avoid confusion with the more internationally used term ‘nodal price’ (which, to different stakeholders, may (or may not) include the effect of losses). This was used:

(a) In various ez2view widgets, but also

(b) Starting in the GSD2019 through until the GSD2024.

2) But from mid-2025 we have started the process of migrating to the use of the term ‘Local Price’ to adopt the same terminology that is used by the AEMO.

(a) Starting with ez2view widgets

… including in the new ‘Congestion Map’ widget released in April 2025 in v9.11.NN [LINK TO COME]

(b) But then later in the GSD2025 [LINK TO COME].

i. they might have been tagged with ‘‘Local Price’ (which we formerly referred to as ‘CPD Price’)’

ii. they might be tagged with ‘Local Price’ .

What’s the purpose of the ‘Local Price’

Reading through the AEMO documentation (including particularly the ‘Guide to Mis-Pricing’ referred to below) it’s important to understand that the ‘Local Price’ (and the closely-related ‘Local Price Adjustment’) is intended to show the ‘impact of congestion’.

But it’s important to understand what this does, and does not, show:

… a binary indicator

Because of how they are defined:

(a) A non-zero Local Price Adjustment (LPA) for a DUID will indicate that the DUID:

i. Is on the LHS of at least one invoked and bound constraint equation …;

ii. that the AEMO has denoted is related to transmission congestion

iii. note that it’s not looking at the whole set of constraint equations!

(b) As such, if a DUID:

i. has a Local Price that is different from the ‘Physical Dispatching Price‘ for a region

ii. then the same can be deduced.

So one might see either of the above as a signifying that the unit is possibly ‘impacted’ by transmission congestion. It’s important to note, however, that this won’t allow the user to deduce (just from this data) if the unit is ‘constrained up’ or ‘constrained down’ by these congestion-related constraints

… but not volume ‘constrained up’ or ‘constrained down’

Specifically:

(a) A large LPA does not necessarily mean ‘constrained up’ or ‘constrained down’; whereas

(b) A small LPA does not necessarily mean that the DUID is not ‘constrained up’ or ‘constrained down’

… so please don’t misinterpret!

… the Local Price is a product of the Bid Price at the RRN

Readers should keep in mind that there’s a circularity in the mathematics that can be loosely defined as follows…

(a) a unit’s Bid Price at the RRN;

(b) can feeds into the Marginal Value …

i. of any constraint equation that’s bound

ii. with that DUID (and potentially others) on the LHS

(d) and hence the Local Price….

(e) which can feed into how a DUID chooses to bid.

How one might use the ‘Local Price’?

With the above circularity in mind (and noting that the Local Price is only calculated from a subset of bound constraints), it’s worth highlighting that the Local Price can be of some use in helping a DUID understand how (and if) any change in bid might have led to a change in dispatch outcome for that dispatch interval … but it’s not a perfect guide in all circumstances…

(a) One might see the ‘Local Price’ for a unit as the bid price (at the RRN) that the supply-side unit needs to bid at, or under, in order to sustain or increase its dispatch target.

(b) Conversely the ‘Local Price’ for a Scheduled Load unit (i.e. not a negawatt) is the bid price (at the RRN) that the unit needs to bid at, or over, in order to sustain or increase its dispatch target.

‘Local Price’ (formerly referred to as the ‘CPD Price’)