In this short page, we will explain about the Market Price Cap – which works in tandem with the Cumulative Price Threshold.
The page is a work-in-progress, so bear with us.
(A) Why is there a Market Price Cap?
When the NEM started, the Market Price Cap (MPC) was called VOLL (the Value of Lost Load).
(B) How the Market Price Cap is set?
Will link in here some useful references
(C) How the Market Price Cap has trended over time?
Here’s a table here of how the Market Price Cap has changed:
(start of the NEM)
|At the start of the NEM, this was known as VOLL, and was set at $5,000/MWh.|
|approx June 2002||VOLL was increased to $10,000/MWh|
|1st July 2010||VOLL was renamed the ‘Market Price Cap’ and was increased from $10,000/MWh to $12,500/MWh
You can find further details about this change on the AEMC website under the ‘NEM Reliability Settings: VoLL, CPT and Future Reliability Review’ (i.e. ERC0080).
|1st July 2012||Something in between, from memory|
|1st July 2013||The Market Price Cap was increased to $13,100/MWh|
|1st July 2014||The Market Price Cap was increased to $13,500/MWh|
|1st July 2015||The Market Price Cap was increased to $13,800/MWh|
|1st July 2016||The Market Price Cap was increased to $14,000/MWh|
|1st July 2017||The Market Price Cap was increased to $14,200/MWh|
|1st July 2018||The Market Price Cap was increased to $14,500/MWh|
|1st July 2019||The Market Price Cap was increased to $14,700/MWh|
|1st July 2020||The Market Price Cap was increased to $15,000/MWh|
|1st July 2021||The Market Price Cap was increased to $15,100/MWh
The first time it hit that level was Sunday 11th July 2021 (the NSW dispatch price at 18:35)
|1st October 2021||On 1st October 2021 the Market Price Cap did not change – however (because of the commencement of Five Minute Settlement) the Cumulative Price Threshold, which is based on the Market Price Cap, did increase by 6 times.
|1st July 2022||The Market Price Cap increased to $15,500/MWh
In conjunction with this, the Cumulative Price Threshold increased to $1,398,100 (from $1,359,100 post 5MS).
|1st July 2023||The Market Price Cap increased to $16,600/MWh
In conjunction with this, our understanding is the Cumulative Price Threshold is scheduled to increase to $1,490,200.